KEY POINTS
- Research from ASIC shows that Gen Zs are feeling financially stressed, with high levels of debt.
- Finance expert shares that there is no specific age to teach the concept of saving; it depends on your child's readiness.
- He emphasises the importance of having constant conversations about money and setting a good example to children.
Research from ASIC shows that Gen Zs are feeling financially stressed, with high levels of debt. This problem highlights the importance of financial literacy. As a parent, it's crucial to start teaching children the importance of saving.
In this episode of Usapang Parental, finance expert Jerry O'Brien offers valuable advice on how to instill good saving habits in children.
As a father himself, Mr O’Brien’s approach to teaching his child to save is not very strict.
“I believe the child's mindset should be ready to absorb the information you’re giving. I throw out ideas and terminologies to them, and when I see they’re ready to absorb them, that's when I sit down and explain everything."
The right age to teach saving
Mr. O'Brien shares that there is no specific age to teach the concept of saving; it depends on your child's readiness.
"I would say, in terms of age, it’s always good to introduce it as early as you think they can absorb the concept but give it in bite-sized information."
Key principles for parents
Mr O'Brien emphasises the importance of consistency.
"This is one of the principles we all struggle with. Find the right timing but be consistent with it. If you want to drip-feed information, be consistent with it. Talk about money consistently, whether in lighter or heavier tones, about budgeting, spending, or bite-sized information."
Effective saving methods
Mr. O’Brien explains that while there are many methods parents can use, he finds the money jar to be particularly effective.
"My mum used money envelopes, and this is my version of it. I labelled them spending, saving, and investing. Whenever my child receives a birthday or reward money, he can allocate it to the jar he wants to put it. You just need to explain the concept. For example, in saving, it can grow a small amount over time, or in investing, it can grow exponentially, in the spending jar, they can do whatever they want with it. You’re introducing the concept of managing money at an early age and the concept of needs and wants."
Teaching children the importance of saving is a crucial life skill, and parents play a vital role in imparting this knowledge.
Introducing the concept of needs and wants
As for introducing the concept of needs and wants. He says that it would depend on how well a child accept the information.
"Maybe you can explain it in simpler terms. It might be difficult for some parents because children often want toys. Parents, like me, feel guilty because you always want to give the best for your child. You might think, 'I didn't experience this when I was young, so I want my child to grow up differently.' Finding the balance is key."
The importance of a savings account
Reflecting on his son's experience, he notes that the money jars lost their effectiveness due to his inconsistency, but opening a bank account proved to be a beneficial decision.
“Now that he’s 13-14, this is an upgraded money jar- the bank account- where he can allocate portions for savings and spending. It’s a good concept because whatever is in his spending account is guilt-free for him to buy whatever he wants. If he sees that he has only $5 left and wants to buy something for $8, he needs to wait to allocate funds once he saves enough from his allowance."
Constant conversations about money and setting a good example
Mr. O'Brien stresses the need for ongoing discussions about money with children. He adds that it’s important to emphasise the value of money.
"For me, you have to hammer down the value of money. There are people working hard in industries to earn a living, and it doesn't mean that when the paycheck comes, you’re ready to spend. By encouraging the idea that money isn't just for spending as soon as it arrives, you teach the concept of budgeting. Always think back to your money jars. It’s a way of budgeting and teaching the concept of budgeting. This is a conversation you can have with your child once they start earning."
'Usapang Parental' is SBS Filipino's segment on parenting. It features the stories of migrant families, parenting issues, raising kids, and parenting tips and advice from experts.
LISTEN TO
'Emphasise the value of money': Expert on how to instill good saving habits in children
SBS Filipino
18/07/202411:17
The content provided is for informational purposes only and does not intend to substitute professional advice.
