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Financial Literacy For Children: Financial Conversations To Have With Your Kid

by on 19/12/2018 5102

Taboo Topics Most Parents Won’t Discuss 

“There’s no way to expect a child at any age to understand money unless you talk about it,” - Neale Godfrey, author of Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children

In most households, money is often deemed to be taboo dinner table topic, the same way how politics, religion, sex, or death were sometimes deemed to be taboo. Many parents are hesitant to broach the subject. Reasons given included that "money" related topics can only be discussed by adults, among adults.

But perhaps the real reason stems from the fact that we, as parents, often regard ourselves as being "not good with money." It could be true, and it could explain why many of us are financially literate only after we entered the workforce in early adulthood. We learned from trial and error. Consequently, we think our knowledge of money is insufficient, and so we neglect to pass it down to our own children.

Financial literacy is the knowledge of how money works in the world. Not only adults, but children also need to learn how to make responsible and informed financial decisions. A study by the University of Cambridge postulated that money habits in children are formed as early as by the time they're 7 years old. At this age, they'll eventually notice and are able to learn their parents' spending habit. What your kids see you do is a lot more powerful than what they hear you say. Set a healthy example for them and they’ll be much more likely to follow it when they get older.

Five Most Important Financial Conversations To Have With Your Kid 

1) People Get Paid For Their Work

Talk about your career. What do you do and why do you love what you do. How did you pick your career. Ask your child what s/he might like to do when s/he older. Whatever what they decide to be when they're older, they will treasure their money much more if they understand the hard work that goes behind earning it.

2) Save Up If You Want To Buy Stuff

Children receive allowances as young as four. Parents should start giving kids allowance as soon as they can count money. "The most basic tool for teaching your kids about money is by offering an allowance," said Kathleen Grace, author of Prince Not So Charming. Talk to them about the idea of budgeting and saving. Ask them what do they want to buy with it; it can be a toy car or a Barbie doll of their choice. Make sure they use a clear jar when saving. Clear jars give kids a visual. When s/he uses a clear jar, s/he sees the money growing. Check how much the item costs and tell them how much they would need to save up before they can buy them.

3) How Does A Bank Work

Most children who watch their parents withdraw money from the ATM would find it hard to understand how does ATM or bank actually work. Most would probably think that anyone can just simply press a series of numbers on it and the money would freely come out of the ATM by itself. For a start, take her/him to the bank with the allowance that s/he has saved to buy the toy (step2). Open a savings account and deposit his/her the money s/he has saved. Then, open an online account and explain to them how online banking works.

4) Giving Back

Once they start making a little money, be sure to teach them about giving. Make them see that giving back is also an important part of life. You can start by telling them to sort through their old toys that s/he is no longer interested to play with and then decide which one to donate. In so doing, talk to them about charity and the importance of reaching out to others in their time of need.

5) Repercussions Of Impulse Buys

Kids know how to capitalise on the impulse buy; especially when it uses someone else's money. Encourage your child to wait at least a day before they purchase anything over RM50, for instance. Parents must also be willing to stand by while their kids make poor money decisions with his or her money. Don't be quick to swoop in, or they won't learn a lesson. Alternatively, parents can also be open about their own personal money mistakes they've made in the past, too. Doing this allows you to lead by example.


Ultimately, to better improve how we teach our children about money, it's crucial that we initiate a dialogue and talk about it. If your kids are old enough to ask you to buy them things at the store, they are old enough to start learning about money. The key is finding teachable moments to share with them how to handle money responsibly.

We as parents, should train good money habits in our kids from young. If you're looking for a Financial Literacy workshop for kids, MoneyTree Malaysia is the place to go! 

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