SINGAPORE – It takes a village to raise a child, as the popular proverb goes. Most parents would agree.
Recognising this, Singapore’s Government recently announced additional measures for families, ranging from more childcare leave and lower pre-school fees to housing assistance and increased direct funding of nearly $70,000 for every Singaporean child from birth to age 17, up from around $56,500 previously.
But financial support for new families is only one part of the story. As children grow up, parents face a longer-term question: How can we make sure our children become financially capable themselves?
The answer is not simply to teach them more about money. Rather, it is to help them develop the judgment to use it well. And that happens through conversation, observation and age-appropriate practices – a process sometimes described as financial parenting.
Financial lessons begin early
Children begin learning about money well before they can count it.
Those who see their parents compare prices learn that money involves choices. A child who is told that something is too expensive may learn restraint. And one who sees adults panic whenever markets are volatile may conclude that uncertainty is something to fear.
These early experiences shape financial habits, behaviours and confidence, which over time influence financial well-being. In effect, parents are teaching their children about money even when they are not trying to.
The apple does not fall far from the financial tree
That also means parents should think about what they themselves learnt about money when growing up.
Many of us carry powerful money stories from childhood. Money may have represented security, freedom or opportunity, or perhaps secrecy, scarcity, status or anxiety. These stories, or “money scripts”, can often shape how we parent around money.
It’s worth asking ourselves: What do we want to pass on to the next generation from our own upbringing? What are we teaching through our words and actions? And importantly, what are we actually allowing them to practise?
These tough questions help clarify which lessons are worth preserving, which may need updating, and which are better left behind altogether.
Knowing is not the same as doing
This distinction matters because financial knowledge and financial behaviour are not the same thing.
Knowing the importance of saving money is financial awareness. Regularly setting aside part of an allowance is behaviour.
Similarly, understanding why diversification matters is part of financial capability. Remaining calm rather than selling impulsively during a market decline is behaviour.
This is why financial education cannot stop at knowledge alone. Children need opportunities to make choices themselves.
That can start simply by making money visible without making it overwhelming. Explain choices and trade-offs, and involve children in appropriate family decisions. Give them some responsibility for a small budget, a saving goal or defined spending categories.
It is equally important to let them see how we behave when things do not go according to plan. How do we respond during market volatility, when an unexpected expense arises or when we realise we have made a poor financial decision?
And children should be allowed to make some mistakes, manage consequences and reflect on what could be done differently next time.
When wealth makes learning harder
For affluent families, there is an added challenge.
Wealth can give children tremendous advantages – education, networks, access to good advice and, later in life, the ability to take entrepreneurial risks.
But there is a paradox here. The same resources that create opportunities can also remove some of the everyday experiences through which financial judgement is formed.
Waiting for something you want. Choosing one purchase over another. Living within a budget. Making a mistake and having to live with the consequences.
If their every overspent budget is topped up and every financial mistake is quietly fixed, children may grow up enjoying the benefits of family resources without seeing the effort, planning and trade-offs behind them.
This does not mean wealthy parents should manufacture hardship. Nor should children be made to feel guilty about being fortunate. A better approach is to give them responsibility while keeping sensible guardrails in place and raising the stakes gradually as judgment improves.
When should investment education begin?
Investment education is a natural extension of this process.
A young child does not need a complex lesson on asset allocation. But as children become teenagers and young adults, investing provides a useful way to bring together many of the lessons they have already learnt about saving, patience, risk and choice.
Research on younger investors also suggests that parents matter. Gen Z investors were more than twice as likely as non-investors to have parents who invested themselves and spoke to them about investing.
But investment education is not only about providing market knowledge. It is also about helping them make disciplined decisions in the face of uncertainty, emotion and long-term horizons. That means discussing not only concepts such as risk and return but also talking about how to respond to losses, uncertainty, market volatility and familiar opportunities.
A useful starting point is to view investing as a personal, long-term, active and diversified activity, which is the investment philosophy at UBS’s Chief Investment Office.
For teenagers and young adults, the lessons can become practical through a mock portfolio, a small investment account or a family discussion about long-term goals. The objective is to help them understand how goals, time and risk fit together and to practise the composure needed to stick with a sensible plan.
Compounding for life
Singapore’s new family measures recognise that raising children is not a one-off expense at birth, but a journey extending across many years. Financial parenting should be understood in the same way.
Ultimately, the goal is not to avoid every financial mistake. Rather, it is to raise adults who can compare, choose, recover from mistakes, seek advice and connect money with purpose.
To adapt another proverb: Give a child money and they will meet today’s needs. Teach a child to exercise financial judgment, and you give them something that can compound for life.
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The writer is the Asia-Pacific head of UBS Global Wealth Management’s Chief Investment Office.
