MANILA - Teaching children about money goes beyond making them understand planning and budgeting, earning and spending, as learning about money is usually a lifelong process.
Speaking to ANC, Rizalina Mantaring, President and CEO of Sun Life Financial-Philippines, shared some of the important lessons parents should teach their children while they are still young.
1. Teach kids that money is earned
Children must understand that money is earned. This may be a little difficult to understand, since most children are introduced to the concept of money in the perspective of what they can buy from it, and not where it comes from.
In order to make this idea easier to understand, parents should teach their children that they need to earn things that they want, either through helping out inside the house, doing good deeds, or working hard for their grades.
It is important to remember that the money earned by the child must be equal to the task they have accomplished. Through this, they will understand that what they earn is of the same value as the effort that they put in.
2. Make them understand that money is finite
Children need to understand that money has a limit. It is easy for children to think that money has no limit since they do not think about budgets and expenses, but knowing money is finite will teach them to live within their means.
It is also important for children to distinguish wants from needs. In order to make it easier for children to understand these concepts, it is advisable that parents set an example for their children.
Parents should show that there are basic necessities in life that one cannot live without, and unlike needs, wants should be less prioritized.
Having goals is also a good practice and working towards achieving those goals will teach children good values.
3. Saying 'no' will help children learn
Mantaring said parents should know when to say "no" to their children in order to teach them how to be financially savvy.
"It's very important that you say "no" because young kids will always say "I want, I want, I want." So we just say, "Do you have the money to buy it?" If they don't have the money to buy it, they know that you can't just get it. Or sometimes we say, we can give it to you as a birthday gift or as a Christmas gift. But we never give our kids things just because they ask for it," Mantaring said.
She also advised parents to only give children what they want if there is an occasion, if they earned it, or if they bought it themselves.
4. Grow money while growing up
Parents should teach their children how to make their money grow.
"As soon as the children understand what money is and the value of money, I think you can start teaching them (about investing) already," Mantaring said.
"The first lesson of course is saving, that you can't spend everything you have, put your money away in a savings account or in a piggy bank. As soon as the children can understand that, then it's okay to teach them about investing," she added.
For Mantaring, teaching children about the value of money will eventually help them manage it properly in the future.
"It's important to teach young kids about money because it's not money per se that gives value to anyone, but what it can buy for people. When you teach kids the value of money, you're teaching them that you can get what you value only if you manage your money properly. It's important to teach them when they are still young," she said.
Teaching money lessons to children may seem daunting, but giving them a piggy bank and asking them to save small amounts of money in it can go a long way.