Highlights
- It's important for kids to know the difference between 'needs' and 'wants; and 'good debt' and 'bad debt'.
- There are activities you can do with your kids to teach them budgeting and saving.
- Banks have information available for parents and children regarding saving, investing and budgeting.
'May PERAan' is SBS Filipino's new podcast series which features financial experts seeking to answer the most common questions about money and finances.
"We need to teach our kids about finances at an early age. They need to learn that money doesn’t grow on trees and that we need to work to earn it," finance expert Maria Papa shares.
It is Maria's belief that when children learn how to save, they in turn learn the value of money and are more likely to carry on good financial habits when they get older.
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Paano ko matuturuan ang anak kong mag-ipon?
SBS Filipino
14/09/202111:31
Maria says the following are important points to bring up with children when it comes to money:
Needs versus wants
A need is something required to survive or get by, while a want is something you can live without.
"Examples of needs would be food, water and a roof over our heads. Examples of wants would be a new toy or chocolates which can even destroy teeth," Maria shares.
The concept of saving and budgeting
A trip to the supermarket can be a fun and valuable activity with children when it comes to teaching them about money.
"Compare the prices of different brands of the same product. Show them how you check out deals that are offered in the store and the next time you go back, ask them to spot those deals. Show them the list of items that you’re buying and sticking to this list and your budget. There are no spontaneous or random purchases. Bring a calculator to make sure you don’t go over the weekly budget."
A savings account
Maria believes that opening a savings account for your child is a good way of teaching him or her how money works.
"You give them an allowance and its up to them to decide what to do with the money. They either save or they spend it."
She shares that you can also ask your child to do paid chores or you can even help them grow their account through compounding interest.
"You can tell your child that for every 20 AUD they save, you will add another 20 AUD to their account. This teaches them the concept of compounding interest."
Investing
While investing may be a difficult concept to teach younger children, teenagers may benefit from learning about it.
"The difference between good debt and bad debt are concepts that you teenage kids should start learning. A credit card is a bad debt but a loan to purchase a home is a good debt. I’ve seen customers who are earning a lot of money but are in a lot of debt. These are people who are not great with managing their personal finances."
Learn from the banks
"If you go to the bank websites, you'll find videos, articles and guides on how to teach kids about money."
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Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.
