Monday, February 9, 2009

Financial Planning - 8 Simple Steps To Cultivate Young Saver

Other than sending your kids to the daily tuition classes, weekly piano lessons or foreign language classes, have you ever think of sending your kids to financial planning classes in their early years? If yes, you're really a financially wise parents. But, do we have such classes yet? No, at least within my surroundings, I haven't heard anyone sending their kids to money management classes yet.

Since there's no formal financial education classes, parents and family play a very important role as a training ground to prepare a child to manage their future financial matter. Perhaps you think that it is hard to have moneytalk with your young kids, but do you know that what you're practicing everyday, indirectly giving them a strong message which directly shape their financial mind?

Thus, I listed below 8 simple practices to cultivate a young saver as below:

1) Bring your kids to the ATM or Bank whenever you do transactions. Share with them the function of banks. Their curiosity nature will result in questions they ask about banking institution. Such as 'Why there're money in the ATM?' Do explain to them in a simple way but
always provide real explanations.

2) Bring them along when you settle your monthly electricity/water/telephone bills. This will show them the monthly commitment they need to prepare when they start their own family or live on their own in the future

3) Give them pocket money or daily/weekly/monthly allowance when they started to know the value of money. The most suitable time is when they started their kindergarten years. Do not give more than enough.

4) Prepare a big piggy bank for them. Teach them to save from their pocket money or allowance to buy desired stuff (toys, books, computer games).

5) Open a saving account for them at local banks. Encourage them to bank-in their savings or cash gifts (angpaos or duit raya) collected during festive season into their saving account. Perhaps can motivate them by adding some interest every time you bank-in the saving for them.

6) Establish short term and long term saving plans for them. Short term saving plan could be buying that computer game. Long term saving could be saving for their tertiary education.

7) Bring your kids and your grocery shopping list along for your weekly shopping. Invite them to write what they need in your grocery shopping list. Teach them to compare prices before do the final purchase.

8) Most importantly, show by example. Do not lavish yourself with an expensive shoe cost RM500 while saying 'NO" to your kid when she requested you to buy her a barbie doll set of RM9.90

I learned most of the practices above by observing my 8-years-old niece's attitude towards money. If you have any other practices to add in, do share with me. I hope you will have a successfuly financial sharing sessions with your kids. And also hope we will be able to build a financially strong generations.

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