Kids, Make Money Work For You (Second Part of A Four-Part Series)

Kids, Make Money Work For You (Second Part of A Four-Part Series)

Saturday, 19 November 2011

Media Type
TODAY online

The importance and relevance of financial literacy to youth is becoming ever more critical as both the spending power and access of young people to wealth increase with the increase of affluence in society. Although research reveals that parents play an influential role in teaching their children this critical life skill, it does not always happen. As educators, we must answer the call to impart this critical life skill of financial education to our students
so that they will be equipped with a set of skills and values essential for the journey of life.

Policymakers, school leaders, teachers and professional development teams are putting in concerted efforts to promote financial literacy in schools by infusing financial education into the formal and nonformal curriculum, to give our youths a head start in managing their own finances.


Being bombarded with advertisements on every corner, teenagers may succumb to peer pressure to be more brand-conscious. Hence, an awareness of the importance of responsible spending, meticulous tracking of spending, spending within one’s means, etc, are very important aspects to impart
to today’s youth. It is not uncommon to see teenagers always trying to compare and compete with peers in acquiring the latest gadgets or showing off a branded bag or footwear. Left unchecked, they will grow up into adults always striving to keep up with the Joneses. Being financially-savvy is one thing,but it is even more essential to be disciplined and practise the productive habit of keeping track of spending so as to manage one’s life better, exercise prudent decisions and be a wise consumer. Budgeting and managing money wisely are the key messages of these programmes. Teachable moments like these complement our schools’ efforts to broaden the learning horizons of our students in order to equip them with the knowledge, insights and skills that will serve them well in the future.

For example, the teaching of mathematics that explicitly connects mathematical concepts, skills, and strategies to purposeful, relevant, and meaningful
contexts promotes a deeper level of understanding in the classroom.


There are ample opportunities for learning and applying lessons taught in the classroom — when managing utility bills, phone bills, and travel bookings, for example. When my family dines out, my children are tasked with checking the bills, thus learning about the calculation of service charge and GST (goods and services tax). Instil in youth values such as the discipline of practising delayed gratification and planning the allocation of resources
to eradicate impulse purchases. Instead of frivolous expenditure — “I want to buy that bag” or vague goals “I would like to study overseas in a university”, start them on planning smart goals. Goals must be specific, measurable, attainable, relevant and time-bound (SMART).

“I want to study overseas” should become “To study at a university in America in four years’ time, I will need to have savings of S$300,000 for my fees, accommodation and expenses”. The next question is, how can they save that much money? Tell them about bank loans, interest, investments, and
share concepts like the diversified portfolio and the Rule of 72. In the case of my children, my husband is the one who plays the role of enthusing to them about investing. My older daughter was so excited that she was always looking out for good stock picks.

Again, this is a teachable moment we can use to try to explain to our children the concept of risks versus returns. My daughter happily bought some unit trusts that have regular payouts, only to learn soon after that she was running the risk of losing her capital sum invested. Welcome to the school of hard knocks.

I do not advocate active daily equity trading in the stock market but what is important is to explain to your children, when they are ready, the concept of buying into a business for dividends and for capital gain. These days, with games like Praxis, Cashflow and even simulation online games, we can learn through play in a safe but simulated environment.

In fact, my younger daughter learned about the economic cycles and their impact on the market through playing the Praxis board game, a brilliant game that was designed locally. Her school offered them a learning activity called “The Stock Challenge” which sparked her interest as she learned about stock picks, PE (price to-earnings) ratios and dividend yield.

Over dinner, topics we have discussed include the stock market, where we discussed the impact of those who got their fingers burnt. On the subject of real estate, up for discussion are passive incomes for rental and gain, the tedium of tracking payment of taxes, and maintenance, which we are trying to delegate to them. It is heartening that there is now a networked learning community with the same shared vision of striving to raise a financially capable generation. Thanks to MoneySENSE, the Central Provident Fund Board, the Citi-NIE Financial Literacy Hub for Teachers and other institutions that have taken the lead, there is hope.

Dr Koh Noi Keng is a senior lecturer at the National Institute of Education and is the chair of the CITI-NIE Financial Literacy Hub for Teachers.

Source: TODAY online, mediacorp