A father is one of the most influential figures in a child’s life, passing down valuable life lessons learned from your own father to your children.
The influence of a father (or father figure) in one’s life is immeasurable. A father is a role model, a first hero, a playtime buddy, and a source of guidance. We idolise our fathers in some way. “Dad” fashion is in these days. You can dress just like dad, even without being one. There is even a special category of jokes made by dads that make us cringe. That’s how much we revere our father figures.
Your dad taught you some of your earliest and most important lessons in life, including how to manage your finances. He meticulously tracked every cent you spent at school and made sure you had enough, even if it meant cutting back on his own expenses. Do you remember him asking about your pocket money expenses? That was all part of the lesson. And when you were in your teens and wanted to go on your very first date with your crush, your dad would secretly slip you a little extra money so you could take your date out for dinner and a movie.
“Traditional” Asian dads are often known for their stoic nature, saying few words and expressing even less. But beneath that exterior, he carries immense pride for who you’ve become. Every achievement, no matter how small, is proudly shared with his friends, and every hug is cherished. Even as an adult, you will forever be his little one.
With Father’s Day approaching, it reminds us how important our parents are. Perhaps you have also become a dad or a father figure, passing down the invaluable life lessons you learned from your own father. These lessons form the precious threads that connect each generation.
Among the crucial lessons in life, besides how to be a good person, is how to manage money. You can teach your children this simple yet impactful lesson through very easy steps that will leave a positive impact on your child’s life.
1. Start with the basics of budgeting
It’s never too early to begin teaching children about money. Once they grasp the concept of handling money, start by giving them a small allowance and encourage them to keep track of their expenses. Kick it up a notch by setting a monthly savings goal with a special reward (like a movie outing) for meeting that target. If they want to buy an expensive toy or gadget, guide them in brainstorming ways to save or earn the money. This approach fosters a solid comprehension of how money is earned, and you will be amazed by their entrepreneurial ideas.
When the time is right, include them in family budget discussions. Be transparent about your financial situation and acknowledge their input. Ask them how the family can save for that island holiday or new car, and how they wish to contribute. Take the opportunity to explain the concept of a family “rainy day” savings. Use examples such as emergency car repairs or a faulty water tank to illustrate the importance of having an an emergency fund. Additionally, discuss your monthly financial commitments, such as house or car loan, and show them how you manage debt responsibly.
2. Teach them how to be frugal
An important part of teaching children how to manage money is helping them distinguish between their needs and wants. Instead of buying a new toy every month, you can strike a deal with them and ask them to donate a much-loved older toy in good condition. This not only teaches them the value of what they have but also instills a sense of sharing for those who are less fortunate.
Part of being frugal is instilling a sense of responsibility and resourcefulness in your child. Teach them the value of taking care of their belongings by encouraging them to clean their school or sports shoes when they get muddied. This habit of responsible ownership will carry into adulthood, fostering a strong appreciation for the things they have.
When your child spends all their pocket money in a single day on indulgences like chocolate and ice cream, resist the urge to give them more. This presents an opportunity for them to learn that money doesn’t miraculously appear out of Dad’s pocket and that there are limits to spending. Over time, they will be more mindful of their spending habits and develop better financial decision-making skills.
Involve your child grocery shopping and make it an educational experience. Ask them to decide which brand of the same product offers more value and quality. Remind them that cheaper isn’t necessarily better and encourage them to make informed choices so they develop critical thinking skills and a discerning approach to spending.
3. Open a savings account with them
Once your child has saved up some of their pocket money, it’s an opportune time to introduce them to the concept of a savings account. Take them to the bank and let them experience the process of opening an account. They can proudly hand over the money to the teller, who can announce the amount deposited. This not only creates a positive connection between saving and a sense of accomplishment but also instills a feeling of maturity and responsibility. If your child is old enough, you can further explain how a savings account works and the concept of earning profit/interest. Encourage them to add to their savings regularly, which they can track online or through statements, and witness the gradual growth of their savings.
4. Get them excited about investing
Children above 10 years old can understand the basics of compounded interest. You can show them a statement from one of your investments to explain how it works. For older children and teens, involving them in discussions about investing in funds can be beneficial. Encourage them to join you in researching investment options and engaging in conversations about risks and potential returns. Getting them excited about investing at an early age will benefit them in the long run, as they may begin exploring investment options independently. If they have any suggestion or ideas, encourage them to draft a proposal and present it to you. This exercise not only ensures that they fully understand the investment, but also hones their ability to articulate their thoughts effectively.
5. Come up with smart money hacks together
If you have a RHB credit card, involve your child in exploring its money-saving features. Together, you can research and discover various offers and promotions, as well as keep track of reward points. This will instill in them the importance of being savvy and thinking out of the box to maximise the value of their spending. Check out the RHB Credit Cards available here.
These invaluable lessons in money management are like treasures passed down from generation to generation, transcending the value of material wealth. On this Father's Day, we extend our warmest wishes to all fathers, stepfathers, adoptive fathers, and father figures who play a significant role in shaping the financial wisdom of their children.
I’m sure my father had always intended for me to learn how to manage my money, so I’m starting with my own kids. You are your child’s role model, so be the one you wished you had.
Happy Father’s Day to all fathers, grandfathers, adoptive fathers, and father figures from all of us at RHB.