MONEY LESSONS for children

Financial literacy is a life skill that can help one navigate through life. Yet, it’s surprising that our schools don’t teach children about money. Parents, however, can teach children important financial lessons as he or she grows up. Here are some tips/ activities appropriate for each age group:

Ages 3 to 5

Discuss how important it is to learn to wait for what he or she wants.

Create three jars – each labelled “Saving,” “Spending” and “Sharing.” Every time your child receives money, whether for doing chores or from celebrating festive seasons or birthdays, divide the money equally among the jars. Have him or her use the spending jar for small purchases; sharing jar for charity or donations; while the saving jar for more expensive items.

Have your child set a goal, such as to buy a toy. If your child does have an expensive goal, come up with a matching program to help her reach it in a reasonable time frame.

Ages 6 to 10

Explain to your child why it is important to make wise choices and begin to engage them in more adult financial decision-making. Also, keep up with activities like the saving, spending and sharing jars, and goal-setting.

Give your child some money, like RM10, in a supermarket and have him or her make choices about what items to buy, within the parameters of what you need, to give them the experience of making choices with money. Help them understand between “I need” and

“I want”.

Ages 11 to 13

At this age, you can shift from the idea of saving for short-term goals to long-term goals. Introduce the concept of compound interest, when you earn interest both on your savings as well as on past interest from your savings.

Describe compound interest using specific numbers, because research shows this is more effective than describing it in the abstract. Explain, “If you set aside RM100 every year starting at age 14, you’d have RM23,000 by age 65, but if you start at age 35, you’ll only have

RM7,000 by age 65.”

Ages 14 to 18

Start discussing higher education options and be sure to consider how much each school would cost.

Don’t let the price tag on tuition fees discourage your child. Explain how much more university graduates earn than people without degrees, making it a worthwhile investment.

Discuss how much you can contribute to your child’s higher education each year to tackle the subject early. Being honest about what your family can afford will help kids be realistic about where they may apply.

Also look at scholarships or grants your child could apply for and how much in loans your child will have to pay back.

Encourage children to take up part-time jobs to help them learn the value of money and hard work.

Ages 18+

Ingrain into children that a credit card should only be used if the balance can be paid off in full each month.