$ management skills for children – Part 2

$ management skills for children – Part 2

In part one of this topic, Carol Yip outlined the importance of instilling money management skills for children aged two to 12 years old. In this second instalment, Yip shares what parents should do for children aged 13 years old until when they enter university.

Secondary school − 13 to 15
By middle school, children know how money is earned and spent. They also probably understand how hard it is to earn money or how quickly it can disappear.

1. Encourage children to start babysitting or do odd jobs around the neighbourhood. This shows them how hard you have to work to earn money.

2. Make allowance payments bi-weekly instead of weekly. This teaches children to budget their money over a longer period of time.

3. Increase your expectations for what the allowance will cover and things that your children want to buy. Discuss with them about their material needs and wants − if they can delay gratifications, find cheaper substitutes or not buying at all.

4. Tie the allowance to a list of weekly chores around the house. Reduce the allowance if chores aren't completed or done appropriately.

5. Ask your children to observe how you negotiate and bargain for better prices (value for money) when you shop with your children in a wet market, at neighbourhood groceries shops, pasar malam (night market) or flea market. Shopping in supermarkets and departmental stores does not allow you to teach your children negotiation and bargaining skills which are required in the corporate and business world.

Secondary school − 16 to 18 and university
Teens and young adults know a lot about money. It is a time where they want their freedom but have yet to gain financial independence. This is the opportunity to fine-tune their money knowledge and teach them principles of cash flow management, budgeting and investments.

1. Encourage your teenage children to find a part-time job. This teaches children to keep to a work schedule and balance their studies, work and life.

2. Make sure that your children continue to put some earnings into their savings account for the future and emergencies. Teach your young adult teens the concept of EPF contribution, SOCSO and PAYE when they start their first job, and tell them that they have to pay for their insurance premium when they get their first pay check.

3. If you continue to provide allowance for your children, switch to once-a-month payouts.

4. Expand your young adults’ financial responsibilities to include gas, cell phone bills and/or house utility bills. Teach them the importance of contributing to the family’s expenses and pay for their own expenses as well. They can keep a record of their daily spending and account for the expense at the end of the month with their monthly allowance.

5. Let your teens draw up the plans for a birthday party or your next family trip, and tell them the budget for the event or trip.