Useful Tips On Raising Financially Savvy Kids

According to Investopedia, financial literacy is the “ability to use knowledge and skills to make effective and informed money management decisions”. It is an area that is often skipped in the formative educational system. As parents, it is your job to fill in the gaps.

Educating your kids to make wise money decisions earlier on will affect their finances in the long run. Consider taking these financial steps:

CONVEY THE VALUE OF MONEY

Encourage your children to absorb the value of money by using tangible examples. For instance, you may employ counting games for toddlers. Grab a pack of M&M’S and have your kids sort each one by color. Let them count how many pieces are available per color.

Once they can discriminate, introduce them to the different denominations of Singaporean money. The difficulty level of your lessons shall increase with their ages. Older children learn best with realistic examples such as an educational trip to the nearby grocery.

Take a conscious effort in providing them information about money. And, be ready to answer their countless questions. Children are innately curious after all!

SET THE RULES ON ALLOWANCE

The idea of giving an allowance is something that many Asian parents embrace wholeheartedly. While it can be a controversial subject, some experts believe that children can learn how to handle their own money by having allowance. Begin by making weekly allotments and cutting it short to bi-weekly allotments for preteens. Limiting the allotments will help your child to continually  be challenged. They must think of ways to make their allowance last longer.

The next step is creating a budget with your preteens and teens. Sit down with your older children and enumerate their streams of incomes and expenses. Highlight the importance of distinguishing between the needs and the wants.

OPEN A CHILDREN’S SAVINGS ACCOUNT

What better way to teach your kid about the value of savings than by opening his or her very first account? Children nowadays were blessed with technology. This means that they can simply review their account balances and transactions online. Watching their account decline over time can instill wiser spending choices. While, watching the account grow can motivate them to save more.

Dwell on are the essence of withdrawals and deposits as well as the safety procedures of online banking. There are several local children’s savings account such as ePOSBkids Account and OCBC Mighty Savers Programme. Both do not require a minimum deposit.

Image Credits: pixabay.com

Image Credits: pixabay.com

Sources: 1 & 2

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Setting Financial Boundaries With Dependent Relatives

It is alright to help your relative out of a one-time financial jam. However, if this person relies on you on a regular basis, his or her actions are indicative of financial abuse. Stand your ground by setting clear boundaries.

ACCEPT YOUR EMOTIONS

Honesty plays a crucial part in establishing financial boundaries. Begin by identifying the family members who frequently ask you for money. Examine how you really feel about their requests. There are several emotions that you can experience such as frustration and guilt. These emotions can overshadow your judgment of the situation.

Image Credits: pixabay.com

Image Credits: pixabay.com

Regardless of what happened in the past, it is time to make a stand for the future of your finances. Do so by addressing your own negative and positive emotions first.

CONVEY YOUR FINANCIAL PHILOSOPHY

When understanding your financial philosophy, include your personality and lifestyle. Communicate this said philosophy when the dependent relative borrows money. Are you a person who values helping others in ways that do not involve money? As long as you bring your relatives back on their feet, I respect your decision.

Discussing your monetary views is uncomfortable. But, it is something that you must work on. You may take the subtle route by saying: “I wish I could help, but my finances are not allowing me to do that at the moment.” To take the direct route, say: “No! I do not believe in wasting my hard-earned money on that.”

LEARN TO BE A FAIR NEGOTIATOR

Let me send a wake-up call to you! Avoid feeling pressured to signing a contract or loaning cash just because the other party is your relative. Whether there are two or more people involved in the decision, negotiating is important if all the parties are to succeed.

Highlight what you are willing and not willing to do with your finances. While these people may have good intentions, you need to be fair to yourself and your finances.

PUT EVERYTHING IN WRITING

Cultivate a habit of having your financial agreements in writing. Protect yourself against legal issues by getting your deals, offers, and other financial agreements in writing. People who respect you and your financial boundaries will not have a problem with this.

Image Credits: pixabay.com

Image Credits: pixabay.com

When family members are involved, money is usually tangled with issues. It is up to you to deal with these issues by setting clear boundaries. Feel free to share the positive and negative ways that money has been used in your family.

Sources: 1 & 2

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4 Financial Tips For Stay-At-Home Parents

Quitting your job to run the household is a significant decision that you and your spouse must mutually agree on. The two of you need to make considerable changes in your lifestyle. On the financial aspect, here are some things that you may dwell upon:

#1: SHY AWAY FROM THE TERM “ALLOWANCE”

Take a trip down memory lane to visualize your primary school years. Was it carefree or stressful? One thing is for sure! Most students depend on their parents to sustain their financial needs. An allowance is given to regularly meet a student’s daily expenses. Calling it allowance highlights that the parents are in control of the child’s financial situation. The mere definition of the word signifies an amount that is permitted for a specific purpose.

If a parent is working and the other is a homemaker then, try shying away from the term “allowance”. As I said, it exudes a sense of authority over the dependent party. You do not want that! As much as possible, you need to cultivate maturity and respect in your relationship. Opt for friendlier terms such as personal budget or entertainment fund.

#2: CREATE A COOPERATIVE BUDGET

It is unfair to strictly control the budget of your spouse and the entire family just because you are the breadwinner. It is important to recognize that running the household is as important as bearing the salary. Staying at home to take care of your children saves cash that might otherwise be spent on child care. This contribution is often overlooked by the society. Turn the tables around by allocating money for the you and your spouse’s personal needs.

Decide on an equal percentage of the breadwinner’s income. This equal percentage will go to the anticipated expenses such as clothes, grooming, and gifts.

Image Credits: pixabay.com

Image Credits: pixabay.com

As Manisha Thakor, the author of Get Financially Naked: How to Talk Money With Your Honey, once said: “When both feel they have the daily freedom to treat themselves…household well-being prospers.”

#3: CONSIDER DIVING INTO INVESTMENTS

You put your cubicle job aside to fully commit on raising your children. This comes with lots of changes including the division of your time. With your newfound hours to spare, educate yourself on efficient ways to grow your savings.

Consider diving into the world of passive income. Investing your money on passive income allows you to reap profit while you sleep. Passive income includes dividend stocks, bonds, and index funds. It is crucial to read about the different types of investments to suit your preferences. For instance, people who can only tolerate low risks may invest their Ang Bao money on the Singapore Government Securities (i.e.,local bonds).

Related Article: How To Start Investing In Singapore

#4: BECOME AN ENTREPRENEUR

With our access to modern technology and other tools, you can accomplish the tasks of a stay-at-home parent and an entrepreneur. Earn extra money by creating an online business. You do not have to break the bank to set up your own online shop. Free websites such as Carousell and Tictail enables you to showcase your products. Furthermore, these platforms have a growing following of audience or customers already.

Image Credits: pixabay.com

Image Credits: pixabay.com

Do you love to make cupcakes, jewelry, or essence oils? Turn your hobby into your own business. The possibilities are endless.

Sources: 1 & 2

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Five Secrets To Handling Your Finances As A Couple

Managing your finances together can be tricky when you are in a committed or serious relationship. However, you can employ several strategies to avoid headaches and arguments surrounding money.

#1: DISCUSS ABOUT YOUR FINANCIAL GOALS

There are a handful of Singaporeans who tackle life from paycheck to paycheck. These people deal with the expenses as they come without forethought about their retirement fund. Do you want to be in the same situation?

You have to realize that financial stability is important in strengthening the future that you want to build together. So, start by establishing at least three financial goals. These initial goals are short-term and realistic. Whether you want to save up for a getaway in Bali or a broadband bundle, your short-term goals will serve as an encouragement to take on bigger goals that will lead up to financial security.

#2: KNOW EACH OTHER’S FINANCIAL STATE

Tying the knot or living with someone who has a bad credit score may affect your finances. Imagine taking out a mortgage. Your partner’s credit rating may affect the potency of your combined credit score. This is not good!

Mutual disclosure can help you reduce conflicts over financial matters. As early as possible, carefully examine each other’s financial state and exchange useful tips. Are there any spending habits that you want to help your partner with? Do you have some outstanding student debts? Familiarize yourself with his or her deeply rooted attitudes and habits toward money.

#3: CREATE A MUTUAL UNDERSTANDING

As a couple, aim to distribute the control of your finances equally. Educate your partner about the facets of personal finance no matter how uninterested he or she might be. Financial literacy is necessary.

Aside from mutual disclosure, mutual understanding is crucial to your success. This means that you need to be aware of what you two can and cannot afford. Furthermore, you must contemplate on the process of dealing with unfortunate events.

#4: MAINTAIN JOINT AND INDIVIDUAL ACCOUNTS

A couple’s joint account is primarily used for shared expenses such as groceries, utility bills, phone bills, and mortgage repayments. Maintain this along with your individual accounts. You are entitled to a separate account because you must treat yourself or your partner personally without affecting the “household fund”.

You might say that this burns the bridges of sharing, but not really. The foundation of having individual accounts is that both would have access to each other’s account to prevent from keeping secrets. Spending beyond the threshold of your personal account is something that you need to discuss with your beloved first.

#5: DIVIDE YOUR MONETARY RESPONSIBILITIES

Compromise could be your best bet when you are sharing the responsibility for your finances. This goes hand in hand with the above statement. Having a joint account and two separate accounts helps to keep your independence and to stick with your budget.

Here are just some things that you must contemplate on when you are dividing your monetary responsibilities:

a. What are the bills that you want to pay using your joint account?

b. How much shall each one contribute to the joint account?

c. Which of your partner’s spending habits do you want to keep and to ditch?

Image Credits: pixabay.com

Image Credits: pixabay.com

May these tips help you to foster good financial management habits as a team!

Sources:  1 & 2

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Do Not Tell These Money Statements To Your Kids

There are some financial issues and information that you shall just keep to yourself.

1. “Your Dad makes more money.”

In a dual-career household, you shall refrain from pointing out which parent earns more than the other. Putting a distinct label on the breadwinner signifies that one’s contribution is more important than the other. It is better to highlight that the two of you work as a team in order to cultivate a brighter future.

2. “Your uncle owes us S$5,000.”

You may be infuriated that your brother has not paid his debt. Sure! S$5,000 is a decent amount of money, but you shall not get your children involved in this issue. Children usually mirror the reactions and emotions of their parents. Telling your daughter that her uncle owes you money may ignite hatred or uncomfortable feelings toward him.

It is an admirable thing to warn your children about the risks of lending money. However, you must use an example that is too close to home.

3. “I spent a lot of money for your gift.”

Most children do not mind the cost of your gift. They simply want to relish the excitement that the act of receiving brings. To an innocent child, there is no difference between a bespoke and a store-bought cake. It is still a sweet dessert!

Putting a price on a gift (i.e., high/low or cheap/expensive) can just change their perceptions. Teach your children that the value of the gift is not always reflected on its price tag.

4. “I am broke.”

Have you ever noticed that some of our adult conversations are exaggerated? Children are less likely to absorb our subtleties in communication. Imagine you uttered these words: “I am broke.” Your young offspring may misunderstand what you just said due to your choice of words. Avoid declarations of financial disaster.

Instead, it is important to give your children reassuring messages. You may say that you have to wait a week until the pay day comes.

5.”Do not tell your Daddy/Mommy that I bought this.”

Your devotion to your spouse does not stop after having kids. Make it a point to discuss about your spending habits and future goals. If you are about to purchase something that you want to conceal for now (e.g., a surprise birthday present), do it at your own time. Do not use the vulnerability of a child as an escape.

If you encourage a child to lie to the other parent, it increases the likelihood of dishonesty. It sends a message that spending money is merely a shameful act. All these wrong signals can be prevented by you.

6. “I dislike going to work.”

No matter how tired you are of answering demanding calls or how much you hate your boss, you shall not verbalize these thoughts when your child is around. Complaining about these negative aspects of the job can make your child feel anxious about the future.

Opt for sharing the aspects that you enjoy the most about your job. What makes your work fulfilling and interesting? Dwell on that. Save the serious talk until she or he reaches maturity.

7. “We cannot afford to buy that.”

After spending a few hundreds on the grocery store, it can be confusing to tell your child that you cannot afford to purchase a toy. He or she may think that you spent all your money on groceries or that you have no more money for the important things. Turn this situation around by teaching your children about the importance of prioritizing and delayed gratification.

You may say something along these lines: “Please put that toy back. We do not need it right now. If you really want to buy it, you have to save up for it. I can help you!”

Image Credits: pixabay.com

Image Credits: pixabay.com

As with most aspects of parenting, it is best to lead as a positive example to your children. Choose your words wisely.

Sources: 1 & 2

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