SINGAPORE – “Mummy, you should buy this,” my five-year-old daughter said to me when we were at a department store the other day.
She wasn’t pointing at a toy, but at a $300 bottle of perfume for me. I calmly told her that it was not only expensive, but also not something I needed.
On the inside, I was mildly horrified – wasn’t it just the day before that she was asking me to buy chocolate and toys?
It was high time I started teaching her about the value of money, I thought. Beyond identifying coins and notes, I want her to understand what money is worth – in a way that is fun and will stick.
But I wasn’t sure where to start with a pre-schooler – despite the wealth of online resources on money management and the knowledge I had gained in the course of my work.
Financial literacy is part of the school curriculum in Singapore; Credit Counselling Singapore conducts workshops on topics such as debt management and retirement planning; and national financial education programme MoneySense teaches core skills like budgeting and investing.
It turns out I am not alone as a parent.
A 2021 final-year project paper by students from Nanyang Technological University’s Wee Kim Wee School of Communication and Information, titled Money Talks: Beyond The Piggy Bank, found a lack of depth and consistency in the way parents cultivated their children’s financial literacy from the time they were young, due to reasons such as difficulties locating childhood financial education resources.
The undergraduates had launched a campaign called Money Talks in January 2021 to inspire Singaporean parents with children aged six to 12 to make money conversations a regular part of family life.
But perhaps telling my daughter something is expensive is not going to land well with her at this point.
“If you talk about budgeting to Primary 2 kids, they’re not going to understand,” says Ng Hau Yee, founder and executive director of non-profit organisation Junior Achievement (JA) Singapore. “So for the lower primary level, it is really just teaching them the basics of what is a need and what is a want.”
JA Singapore offers free life skills programmes such as work readiness, entrepreneurship and financial literacy, targeted at those aged six to young adults.
For pre-schoolers like my daughter, Ng suggests taking them on grocery runs.
The idea is to show them how their parents shop from a list and within a set budget, and to have them note what each item costs. Being part of the process teaches children to track spending and weigh purchasing decisions – rather than just watching groceries go into the basket, with the final bill tallied only at the checkout.
Ng also recommends getting children to compare prices across brands for the same category of items, so they get a sense of which options are cheap, expensive or somewhere in between.
This also teaches value, she adds.
“It’s like, okay, I want to buy a granola bar. This costs $5 for one bar, versus a pack of five for $6. Of course, you want to buy something that is good. If they are all good and taste the same, why would you want to buy one bar for $5, versus five bars for $6?”
Beyond taking part in grocery runs, some parents, such as Jaslyn Ng, believe children need to have a personal stake when it comes to learning about money.
The financial services director at insurance company Prudential Singapore co-pays for items that her children want – a practice she started when they were toddlers. Her daughter is now 14 and her son 12.
When at the toy store, for example, she sets rules and expectations clearly to them, including that presents are meant for special occasions, such as birthdays. Toys that her children want outside those times have to be co-paid for with their own money.
“I will set a budget of, say, $10. I will pay $8, while they pay $2. The concept is they must have skin in the game.”
Ng also makes it a point to be consistent with her children whenever she says no.
“I don’t mince my words and I don’t backtrack. When we are inconsistent with our behaviour and words, kids will know there is a buffer to push back. My kids know when I say no, it means no. It creates a form of emotional security.”
She adds: “In the outside world, you cannot keep pushing and expect people to give in to you. Not everything you want, you will get.”
Ng grew up in a household where her father was the sole breadwinner for a family with three children. Experiencing that “lack of something”, she says, made her work hard.
“My parents didn’t allow me to have everything I wanted. For my own kids, I don’t feel I am shortchanging them in any way. I give them the fundamental things they require in life, but they cannot keep having it all.”
Lawrence Tan, content lead at the Institute for Financial Literacy, a collaboration between MoneySense and Singapore Polytechnic, says parents tend to overlook their own behaviour and attitude towards money when teaching their children about it.
“Parents typically approach it from, ‘I’m teaching you some principles, some truths, which is for your own good’ kind of stuff. That’s well and good, but parents also forget their own attitude and actions sometimes speak louder than what they believe or think about money,” he adds. That means doing what we tell our children to do.
He says: “As parents, we have to make sure our own script is consistent with what we want to articulate to our children.”
While he finds that, on the whole, parents are more aware of the importance of financial literacy for their children, learning how to implant key financial literacy concepts and having these lead to behavioural change remains a work in progress.
“Some parents are not sure how to do it. Some are given too much information and are confused about what’s right and what’s not,” he says. “We have to teach them how to distil it. We’ve also seen that confidence matters, and that taking baby steps is good.”
For parents who never really talked to their children about money when they were young, or who stopped doing so along the way, he says it is never too late to reopen the conversation when they are older.
“Parents are very excited about this when their kids are young, but it peters out for whatever reason as the kid gets older. By the time they want to re-engage the teen, there’s a huge gulf. Parents find their teens have a totally different mindset,” adds Tan, who was a banker for almost 30 years.
“Teenagers largely rely on sources outside the family for information about money. Parents feel that when it comes to money, they can no longer influence their children. External sources are not necessarily a bad thing, but they are more complex because there are commercial and vested interests in the messaging.”
Tan finds that Singapore youth are “very exposed” to things such as consumer credit, buy-now-pay-later schemes and investment platforms, and that they may “get sucked into the hype, platforms and products without really understanding the risks and downsides”.
A recent article by The Straits Times reported that ensuring financial literacy among youth and strengthened cyberdefences were among the key priorities of the Organisation for Economic Cooperation and Development amid the growing importance of digital finance and more youth worldwide dabbling in financial investments at an increasingly younger age.
“Parents should be the first source of information. Your kids will dabble in these,” says Tan. “Parents have to not just keep up with, but also understand what is in the ecosystem or world of their child. As children grow older, they are more exposed in a more rapid way. They pick up things quicker. It’s important that parents are equally plugged in.”
Also, money lessons are lifelong.
“There isn’t an end goal where you are done and up to date with financial education. But the fundamentals – like this life skill – I think it’s perpetual,” says Tan.
“As long as the person is able to make some decisions on his or her own, I don’t think there is an end goal. We do a lot of active ageing for Singaporeans in their golden years. They’ve got different needs, like long-term care budgets, health insurance, how to avoid scams and financial fraud.”
Not sure where to begin the money conversation with your children? Here are some practical tips to get started, by age group.
At this age, using coins and notes as teaching tools gives children a tangible sense of money, and they can visually process that spending means having less left. Taking them grocery shopping shows them money can be exchanged for things.
Pre-schoolers can also be taught what needs and wants are.
The Institute for Financial Literacy has activity kits (ifl.org.sg/money-sense-for-your-child) for children aged three to 16 that parents can print out.
JA Singapore’s Ng says it is important to teach primary school kids to differentiate between a need and a want.
“Even when they are older, we always have to start with the concept of needs versus wants because everybody’s favourite words are ‘I need’. I need this, I need a dog, I need an iPhone. But the word here is ‘want’.
“So we teach them that there are only three basic needs: clothing, shelter and food. But then not all food is a need, right? Such as candy and ice cream. A fancy restaurant is not a need. Basic clothing is a need, but you don’t need to wear $150 sports shoes to go to school.”
Children can be taught a simple sequence for money: earn it first, save before spending, and any extra can be donated to help others.
To teach the concepts, parents can use the www.cha-ching.com/en website as a resource. It was developed by the Prudence Foundation, the philanthropic and community investment arm of Prudential, with Cartoon Network Asia and children’s education expert Alice Wilder.
Taking on a part-time job during school breaks and budgeting for things such as food and leisure come into play in the teenage years, especially in upper secondary.
The principle of distinguishing needs from wants still matters, especially as teenagers gain more spending power and start going out with friends for meals and socialising.
When older teens and young adults start to show interest in investing, parents can go through the different options, from fixed deposits and exchange-traded funds to stocks and bonds, as well as the roles of, and differences between, financial advisers and robo-advisers. Parents can also do a risk assessment to see how risk-averse their children are.
It is important to make it clear there is a difference between investing and gambling, says Tan. Gambling is “not the way to manage money or hope for it to grow”, he adds.
“I also tell my children that taking on debt is a necessary evil – but you need to understand what it is for, and the implications and consequences.”
