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Too Young For Money Management? Think again.

It Pays To Learn – the trick to teaching your child money skills is to make it age appropriate, say the experts. So how do you help your pre-schooler understand that money doesn’t grow on trees or drive the message of compounding and delayed gratification?

Read on for tips from the experts on how to raise a financially savvy kid.


Experts agree that financial literacy is a critical life skill that should be taught from a young age. “Being financially illiterate can prove to be an expensive mistake later in life,” says Ng Li Lian, head of Mass Segment at OCBC Bank. She’s in her early 40s and has two kids aged 13 and nine.

Tan Meng Wei, 41, owner of Star Learners Group and a former banker, says he has seen too many cases of people with excellent academic results but lacklustre financial skills. “I dare say money skills are much more important than academic success. The earlier you start (your kids on financial literacy), the better. What’s the use of being a doctor when you don’t know that half your revenue goes to the landlord of your clinic?” says the father of four children aged 11 to four.

AGES 3-4

Start with the basics. Sure, you may be more preoccupied with potty training and tantrum-proofing your pre-schooler now, but don’t forget to weave in some lessons on money, too. At this age, your child won’t be able to understand what cash is, but you can start by teaching her to identify the different denominations of coins, suggests Li Lian. One way to do it is to make it into a fun game. Get her to sort out coins into different sizes and colours. A game of pretend is another fun way to familiarise your child with money. Jeannie Lim, a stay-at-home mum to two children aged six and four, plays pretend shop or restaurant to help them get a hang of money skills. “I’ll cut out paper money, bring out all the toys they want to ‘sell’ and turn the living room into a pretend store. It’s great fun and educational,” she says.

Teach thrift

Experts say this is a good time to introduce them the concept of necessity versus luxury, especially when you’re out shopping. Li Lian suggests playing a game of “needs” or “wants” when you and Junior are out doing grocery shopping. Point out that things like milk powder and rice are “needs”, while that chocolate bar and shiny pack of stickers are “wants”. Kids this age may also start asking for toys and other objects of desire. When they do, take the opportunity to get them acquainted with the idea of thrift. “You have to explain to your child that a trip to the toy store does not always equate a better toy. A cousin’s hand-me-down can be just as much fun,” she says. As a parent, do you have the habit of buying things you don’t really need? Meng Wei believes this may encourage your own child to ask you to buy things simply for the sake of buying them. “When I see my child not playing with the toy he asked for, I simply stop buying toys for him,” he says.

AGES 5-6

Lessons along the way

Now’s a good time to expose Junior to handling money. Meng Wei, for instance, allowed his son to buy drinks at the food court last year when he was six. “This is critical for kindergarteners as they will be handling money once they go to primary school,” he explains. Leonard says you can also grab the chance to introduce the concept of subtraction and addition to your child. “I’ll give him $2 to pay for something that costs $1.90. That will allow him to get back some change. And we can then talk about why he got change back from the vendor,” he says.

Make money

Growing up, Leonard’s parents were not well to do and bought him only two toys – one on his birthday and the other at Christmas – each year. To be self-sufficient, he’d buy trading cards and stickers at a low price, and re-sell them to classmates at a higher price. From there, he developed a keen sense of business acumen. Although the entrepreneur can now afford to give his sons the best toys, he “fights the urge” to buy them.  To introduce the concept of buying and selling, Leonard organised a garage sale, and got his pre-schooler to sell his old toys and clothes. “I allowed him to set the prices for his items, and negotiate with the buyers. After that, I let him put the money in his piggy bank,” he shares.

Learning self-control

Drive home this message and of saving towards a goal. “It doesn’t necessarily have to involve money or buying a toy. It could be an activity the kids want to do, like going to the zoo. I’ll set some conditions, and then if they manage to fulfil them, I’ll comply with my part of the bargain,” says Leonard. “This helps to foster a sense of self control, which is important in life. The child knows that he will get it later, but not now.”

Want to turn your little one into a little investor? Read how at http://thefinder.life/kids/young-learning/4-easy-ways-nurture-junior-investor

By Eveline Gan, Young Parents PreSchool Guide, 2014

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