Raising financially savvy kids in digital age: An Ultimate Guide for Malaysian Parents
Illiteracy is inconvenient in life,
but financial illiteracy can be disastrous.
Never too early to start
Financial education for kids doesn’t need to be complicated or boring. You can start teaching your children about money from a young age, even as early as 2 years old. Simple activities like grocery shopping or dining out provide excellent opportunities to introduce them to the concept of money. For example, you can explain to your child that you are going to pay for the groceries or meals at the cashier. This is a great way to help them understand the value of money and how it is used to purchase the things we need or want. As your child grows older, you can also teach them about the difference between ringgit and sen. By starting early, you can set a strong foundation for your child’s financial literacy. This will help them develop lifelong money management skills.
Learn through games
Learning about money doesn’t have to be a tedious task. In fact, it can be a fun and engaging experience through games. After all, we don’t want to bore our children while teaching them one of life’s most important skills. One classic example is Monopoly, a board game that teaches kids about money management, investments, and financial planning. The Game of Life is another exciting board game that teaches children about the various stages of life, from growing up to retirement, with each step being a major milestone. These games help children to learn how to make decisions and the impact of each decision on their financial situation. You can easily purchase these games at Toys’r’Us.
Weekly allowance
To start teaching children how to use money in the real world, a weekly allowance of RM 5 – 10 is generally a good place to begin. You can increase the allowance depends on the your financial abilities and the child’s age. This allows children to learn how to pay for items at school canteens or bookstores, calculate change, and manage their money. It’s also an excellent opportunity to teach them about budgeting and saving. By using a printable allowance tracker for kids template, children can record their transactions and keep track of their income and expenses. They can even save any extra money they earn in a bank account. Then, they can learn about the interest payments on their savings. This is a crucial step in developing good money habits and practicing money management skills early on.
Allow them to make decisions
It is essential to empower your children to make their own financial decisions, even if you know that they may make mistakes. For instance, if your child decides to spend all of their money on desserts or toys, it provides an opportunity for them to experience the consequences of overspending. Allowing your children to fail when they are young and learn from their mistakes can help them to develop financial literacy skills without the risk of catastrophic financial disasters such as bankruptcy in adulthood. This approach also provides an ideal opportunity for your children to learn about the differences between instant and delayed gratification. In fact, by making mistakes and learning from them, your children can horn their skills in money management and make better financial decisions in the future.
Talk about credit
Credit can be a powerful tool that can either empower or destroy us financially. While it can provide us with opportunities to improve our lives and secure our future, misusing it can lead to devastating consequences. In today’s digital age, where e-commerce is thriving, it’s becoming increasingly easier to fall into the trap of impulse buying. The enticing offers of easy credit options like Buy Now Pay Later (BNPL) and 0% installments have made this problem worse. Although seemingly harmless, these options can lead to accumulating excessive debts if not used responsibly. You might end up with hefty penalties, fees, and high-interest rates. Thus, it’s essential to educate our children about the responsible use of credit, starting from a young age. Being financially savvy kids, they can avoid financial pitfalls of debts and build a healthy credit score.
Further more, parents have a valuable opportunity to teach their children about the differences between credit cards and debit cards, as well as the importance of timely payments to avoid high interest and late payment fees.
Be transparent
Parents must lead by example when it comes to financial literacy for their children. It’s not enough to expect them to learn on their own. Be open and honest with them about your own financial situation. This includes any mistakes you’ve made and how you’ve overcome them. Talk to them about the importance of saving for education and retirement, managing investments, and making responsible financial decisions. Let them know how you handle mortgages, car loans, and what you plan to do with extra money. By providing exposure to money management at a young age, children can develop good financial habits and become financially literate.
Being financially savvy parents first before raising financially savvy kids…
Raising financially savvy children is more challenging than ever in today’s digital money era. Therefore, it is crucial for parents to instill good financial habits and judgement as early as possible. If parents feel that they lack the necessary financial knowledge, they can easily educate themselves by reading more books on personal finance and investment. These books are available at major bookstores in Malaysia.
