Saving and investing are part of the financial literacy journey of a person, and teaching these skills prove to be most effective when started at a young age.
For financial literacy advocate, columnist and author Rose Fres Fausto, teaching her three sons how to deal with money came hand-in-hand with teaching them how to read and write. Now that her sons are all grown up, she shares how she and her husband raised children with high “FQ”(financial intelligence quotient):
1. Start them early. As soon as their sons were born, they opened savings accounts where cash gifts they received were deposited. By the time they were old enough to start asking about money, they already had some money saved and invested under their names.
2. Start small and show them how to grow their own money. They used easy-to-understand terms and easy-to-follow steps for their children:
Step 1: Save at least 20% of allowance and cash gifts and keep in a “treasure box” together with a record.
Step 2: Once savings reaches PHP 500, deposit in an ATM account, which is called a “small account.”
Step 3: When the amount goes beyond the minimum balance, transfer cash to a “big account” or higher-yielding fixed-income instruments.
The kids also learned that the “small account” can only give very low interest because they can withdraw it anytime, while the “big account” yields better returns since they are giving the bank more time to invest their money. Another option to grow their money aside from “the big account” is investing in stocks, which they hold for the long term.
3. Time is money. They showed their children about the “magic” of compounding: how savings from their weekly allowance can turn them into teen-age millionaires, if they save religiously. In accumulating wealth, the biggest factor is time – and time is what the youth have an abundance of.
4. Make it a habit. It only takes 21 days to form a habit, especially if one has the will. They taught their sons to be conscious about their regular expenses or little things they buy, and prescribed a minimum 20 percent for savings. As their children got into the habit and earned more, they were also able to save up more.
5. Impart the values. Kids these days are exposed to a lot of peer pressure which is why it is important to raise children with a healthy self-esteem. They know they do not have to buy expensive things just to be “cool” or just to belong. When they go to a store, they do not tell them, “We’re not buying that because we don’t have the money.” This way, they will know that it is not only “having” or “not having” money that determines the purchase. Instead, it is about being in control of their money and not the other way around.
Ms. Fausto also shares that when teaching about money, parents should teach it with the right values. If what children do with and for money does not agree with their core values, no amount of money will make them happy as grown-ups. Moreover, it is about setting a good example as parents. Values are better caught than taught, and everything they learn in life starts at home.
It is indeed never too early or too late to start saving, as long as your children have the will to do what you have planned, and the patience and discipline to follow through. And to make savings even more exciting and rewarding, parents can accompany their kids to the nearest PSBank branch to open their PSBank Kiddie and Teens Savers Account. This not only makes their savings goal official, but will also help both parents and their children keep better track of their progress. The PSBank Kiddie and Teens Savers Accounts are for children 0-12 years of age and teens 13-18 years of age. It has no initial deposit or maintaining balance and the child or teen depositor automatically gets free personal accident insurance from Charter Ping An Insurance Corporation, with insurance coverage equivalent to five times the value of his average daily balance.