According to Malaysia’s Financial Education Network National Strategy Report in 2020, 53% of Malaysians have savings enough for only three months’ worth of expenses. Only 29% realise the importance of saving money for emergency funds since the first Movement Control Order was implemented in March 2020. This further emphasises the importance of financial literacy.
Set your child up for a brighter future by teaching them to be financially adept. Children are at their most impressionable at the ages of 9 until 12. This is when they are old enough to understand the concept of good money management and yet young enough to establish good habits.
Get your child to start practising financial planning with these four useful tips today:
1. Empower children with the right skills and education
Teach your child basic financial concepts such as saving, budgeting and distinguishing between needs and wants. Websites like youth.handsonbanking.org provide simple yet useful lessons on these topics.
Encourage them to save with a goal in mind. For instance, if your child wants to save up for a bicycle worth RM300, agree on a savings plan like setting aside RM2 every week. When your child has achieved their savings goal, let them decide if they would like to use it, or continue saving for something bigger. This empowers your child in deciding how they would like to use their hard-earned savings.
A strong foundation in money management will help children grow into financially responsible adults.
2. Make learning fun, easy and engaging
Engage children using different learning styles and explore what works best. Creative learning methods such as comics or digital games will ensure that your child learns more effectively. Make your child’s financial education journey a truly fun experience with websites such as www.alliancebank.com.my/aeiou#video and www.practicalmoneyskills.com/avengers.
Want a break from the screen? Give children a DIY experience and help them make three different coin jars for savings, spending and planning. Consider using plastic bottles, cans or cereal boxes for this project. Once they have designed and completed these coin jars, explain to them about how money saved in each of the coin jars will serve different purposes.
Play helps to nurture imagination and creativity, inspiring your child’s natural curiosity and keen sense of adventure.
3. Motivate them by rewarding the process of saving
Be a cheerleader in your child’s financial education journey. Reward them along the way, as they learn to establish routines and good money habits.
Use innovative methods such as, “For every week that you save RM1, mummy and daddy will increase it to RM1.50 at the end of the week. However, if you spend all your pocket money that week, there will be no extra 50 sen.”
Children recognised for their good behaviour or progress will continue practising it. Eventually, their good behaviour will become a habit.
4. Help children realise the power of their actions
Combine reward and philanthropy to reinforce your financial lessons. For example, bring to life financial lessons by giving monetary rewards for good behaviour and grades, or helping with the house chores. Then, encourage your child to donate a portion of their financial reward to a charity organisation.
This will help children to learn about empathy and generosity, understand concepts such as income inequality, and expand their worldview. He or she will begin to realise that the simple acts of saving and giving can make a meaningful difference to someone else’s life.
By helping our children to become financially savvy, we are equipping them with a crucial survival skill that will last them a lifetime.