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Shape your child’s financial destiny

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As a wealth builder, I considered it my duty to help shaping my child’s financial destiny. A few days ago, I bought an endowment plan after much financial planning with my wife. The policy was purchased under my name but eventually when it matures twenty years down the road, we plan to use the money for our daughter’s university fees.
We thought that since I am the sole breadwinner, the policy should insure me, so that in case if anything happened to me, the policy can still sustain and provides for my daughter’s education fees.
Beyond this saving plan, I hope that my daughter will grow up cultivating a good saving habit and develop prudent personal finance skills. This is important, especially so in an expensive city like Singapore. To this end, my wife and myself think that parents have a critical role in shaping their child’s financial destiny.
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Lead by example
Contrary to what many parents thought, toddlers by as early as 14 months, are masters at reading social cues. This means that children often observe and take the cues from parents’ life habits. If your financial situation is consistently in a bad shape, you are not going to convince your child when you try to educate him/her on financial prudence. Always remember to walk the talk and lead by example. If you want to inculcate good saving habit in your child, make sure that you practiced it as well. Reduce your debts and closely monitor your expenses. You will be surprised that over time, you child will pick up these good habits even if you didn’t tell him/her.

Right values
Occasionally, point out to your child the difference between needs and wants. If your child can appreciate the difference, he/she will be able to appreciate the value of money and reduce impulsive spending.

Many Singaporean parents bought expensive electronic gadgets for their young kids, thinking that by doing so, their children would be IT savvy. However, I personally feel that young kids do not need these electronic gadgets. I think it is more important to have face time with them and I would rather playing chess or board games with my daughter in future. Also, do not bail them out if they spend their money too quickly. Allow them to experience the consequences of their actions.
Inculcating these right values would go a long way in shaping your child’s financial destiny.

Budgeting
Budgeting is a learn-able skill and parents are the best persons to teach this skill as it is often not taught in school. You can start off with simple budgeting by teaching your child how to plan weekly expenses for food, stationery supplies and clothes.

Monitor your child’s budget for a few months and adjust if necessary. In addition, let them participate when you draw up monthly household budget with your spouse. Your child can pick up tips by observing you budget for the household. When your child becomes older, start giving allowances on a monthly, rather than weekly basis. This teaches the child to budget over a longer time period and helps to shape your child’s financial destiny.

Rewards
Try to reward your child if they accomplished little tasks set by you. The amount can be as little as $1 coins so that the child can appreciate the value of exchanging hard work for monetary rewards. Setting achievable tasks and rewarding your child would also encourage them to save diligently. Buy piggy banks for your child and let them drip feed them. Over time, after your child accumulate lots of coins, you can open a bank saving account for your child and deposit the coins. Having their own saving accounts is important as it gives children a sense of ownership. Tell them that with the extra money, they can buy something they want to buy.

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SG Wealth Builder

One thought on “Shape your child’s financial destiny”

  • SG Young Investment
    August 2, 2013 at 11:51 am
    Permalink

    Your daughter is lucky to have a parent like you 🙂

    This is how i want to teach my children too in the future.

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