Financial literacy inculcated from a young age can play a positive role in shaping students’ beliefs, behaviours, and decisions that influence their lives for years to come.
While financial education is unfortunately not a mandatory subject in Singapore schools, that does not mean that students cannot learn about personal finance in school. Just as one can pick up “soft skills” like time management and social dynamics in the school environment, there are plenty of opportunities to seize teachable moments based on day-to-day student life.
#1 Decision-Making Through Budgeting
Money is a finite resource and students need to learn how to manage money. Even as adults, there are limits to how much one can spend.
By needing to plan and ration their allowance, kids learn about making choices. If they buy that cute eraser in the bookstore, they will not have money left for ice-cream. Once money is spent in one area, its gone.
By having an allowance that they manage themselves, they will also learn about the need to save up for bigger ticket items they want, along with goal-setting, delayed gratification and deciding whether something is really worth the money.
Managing a budget is a crucial skill for life, as well as in the workplace. The discipline of a budget can help one pay off debt, save more money, and reach one’s financial goals. It can also help your child be more mindful about their spending, leading to a deeper appreciation of the things around them.
#2 Finding Alternatives to Spending
When money is scarce, your child would be incentivised to seek out alternatives to spending money. You could discuss if something that your child needs can be borrowed. Or perhaps there are tutorials available online to make that item. Learning to perceive and utilise resources other than money at one’s disposal is a very powerful and valuable asset for the future. The pride and joy at creating something with one’s own effort, without spending a single cent, can be wonderful.
For entertainment, there are plenty of activities that do not require spending money if one bothers to look. Going to public parks for instance, or checking the calendar to attend free concerts.
As the saying goes: a dollar saved is a dollar earned. Cultivating the habit to always see if there are alternatives to spending money can help your child avoid impulse buys and unnecessary purchases. This is even more crucial in an age of online shopping, where frivolous purchases are just a swipe away.
#3 Appreciating the Value of Money
In school, there is always “that friend” whose parents shower them with the latest and greatest gadgets and branded goods. And if your child comes home asking to buy those things, they need to understand that not having those things is okay. Everyone has differing financial resources. Thus, living one’s life without always comparing with others is a fundamental mindset to inculcate.
If they really want something, and upon consideration, you agree it’s a worthy aspiration to work towards, you could literally make your child work for it.
You can pay them to complete additional chores around the house (that are beyond their usual “duties”). Another idea could be to get them to pick out some of their own stuff which you can help them to list online and liquidate. If they have a certain skill, like handicrafts or have music qualifications, they can start their own mini-business. This makes for a fun introduction to entrepreneurship and marketing.
For kids, it might be hard to appreciate and respect the value of money. By making them put in sweat and time, money is no longer an abstract figure, like points in a video game.
#4 Importance of a Rainy Day Fund
Being prepared for unexpected expenses that crop up is crucial. Many adults may not think that they need an emergency fund, but shit things happen and having a buffer to tide through emergencies can save you from financial ruin.
When your child inevitably comes to you for additional funds, perhaps to pay for Girl Guide cookies that their friend is selling, or to buy a present for their best friend, that would be a great time to talk to them about having an “emergency fund” that they can tap on when unanticipated expenses arise.
Financial education is an exciting and important topic. Do remember that theory is just one part of the equation. Having financial literacy is as much about cultivating good personal finance habits through practice.
This article is far from exhaustive. Student life is full of lessons that you can seize and take advantage of teachable moments. When you do so, you help your child take one step towards being empowered to take control of their financial lives and grow up to be a financially responsibly individual.
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