Financial Responsibility Series (TODAY)

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This is Part 1 of a 4-part series on Financial Responsibility.

Teach your kids financial responsibility
by Koh Noi Keng 04:45 AM Nov 12, 2011

In a four-part series, financial planning experts will be offering tips on the financial needs for each phase of a person's life. Today's piece will look at teaching children about money. Next week, the focus swings to helping youths, before turning to working adults and how they can allocate and manage their assets.

Research suggests that children as young as three years old are able to comprehend the concept of money. By 12, they would have formed habits that will take them into adulthood.

You might be surprised - "three years old?". Yes, like everyone else, kids learn best though play. Playing readily available games such as counting or sorting coins provides great opportunities to talk about what a dollar can buy and how every cent counts.

Use life's everyday moments to teach kids about budgeting and about the concept of opportunity cost. Let me illustrate how I explained to my daughters a whole lot of economic and financial concepts in simple terms.

My then-five-year-old daughter was enrolled in a Junior Music programme at Thomson Plaza and we took a cab to and fro for the first few lessons. Then, we took the bus and she was thrilled to describe her experience to Daddy later at home.

To explain the concept of opportunity cost, I used dollar notes to show her how by spending on one expense item, we could not spend on another. I explained: "It is your choice. If we take a cab, then we'll use up our entire budget. But if we take the bus, we have money left over to buy a fish (the fish-shaped cheese pancake) and a book at Popular Book Store."

In the weeks following that first ride on the bus, she always chose the bus so that she could have her fish and enjoy a new book.

One day, she flagged down a cab. I was surprised and after we got into the cab, I had to ask, "Sweetheart, don't you want your fish and book today?"

My daughter replied with a smile: "Nah ... Mommy, you look really tired. Grandma told me that you've been marking till very late the past few days and I think we should just relax and be chauffeured."

I was so proud that besides succeeding in imparting the economic concept of opportunity cost, I had also managed to help her prioritise and decide on a wise allocation of funds. She seemed to have understood the concept that money is only a means, not an end in itself and that we should use money for our loved ones, and when necessary.

You may be thinking she deserved the fish and book, but I didn't buy them for her. Don't get kids used to having "easy" money, as the value of money will then no longer be taken as seriously. It also trains them to decide whether it is a need or a want. My daughters are now 21 and 23 years old, and they are still as prudent as before.

Around the age of five, start your child on a piggy bank. One day, I took my daughters to open a savings account at the bank and used the bank book to show them the printed proof of how their money was growing in the real bank. They were overjoyed and looked forward to making trips to the bank.

During the first week of primary school, my younger daughter asked for more money to buy cute chick-shaped erasers from the school bookshop. I refused and suggested she start saving her pocket money if she wanted those erasers. That was how she realised that she had to make decisions about how to spend the fixed allowance that she received. She made arrangements with her grandmother to pack sandwiches for recess and brought a water bottle so she had money to buy her cute erasers.

We started giving our elder daughter an annual allowance when she was in Primary 3. By Primary 4, I encouraged her to record her daily expenses by giving her a pretty diary. My younger daughter was keen to participate in this "new game" too. To encourage them to save, we promised to match dollar-for-dollar the amount they saved in the bank and did not withdraw until they were in college.

As a parent, you have ample opportunity to talk to your kids about money. Discuss what smart money habits and decisions are all about by talking about your decisions. Take them through your thinking and decision-making process. Parenting skills include positive role-modelling so if you have made a wrong decision, admit it and talk about it so they can learn too.

Christmas shopping is an example where you may need to justify your expenditure to your kids, otherwise they will experience cognitive dissonance in seeing you behaving differently from what you normally advocate. The concept of planning and budgeting to share generously with loved ones once a year has taken on a new dimension as long as it is well within our means to do so.

Children can understand that with careful planning, it is possible to afford a little lifestyle indulgence, much like the fishes and chicks my daughters used to love.

There are lots of activities you can do with your children both at home and outside. Parents can build a nurturing environment and leverage on everyday opportunities for experiential learning so that learning is fun and spontaneous.

There are plenty of fun games that teach kids about money. Look out for Agent Penny online and smartphone game apps to be released in 2012 to schools in Singapore for free. Or play board games such as Monopoly, Game of Life and Pay Day. There are also lots of opportunities to talk to your kids about planning, investing in real estate and passive income.

Kids love to explore their environments, develop self-confidence and self-esteem, learn about accountability and develop social responsibility, so why not financial intelligence?

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.
My Value Investing Blog:
Thanks for posting different articles from various newspapers, MW! This article will help my uncle who has a 3-yr old kid and have emailed this to him. Thanks once again!
Visit my personal investing blog at now!
This is Part 2 of a 4-part series on Financial Responsibility

Kids, make money work for you
by Koh Noi Keng
04:45 AM Nov 19, 2011

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 non-formal 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.
My Value Investing Blog:
For Part 3, it is easier to attach the article from TODAY as there are 2 tables involved.

Please see attached. Smile

Attached Files
.pdf   TODAY - November 26, 2011 (Understanding Investment Strategies).pdf (Size: 172.95 KB / Downloads: 50)
My Value Investing Blog:
Let's say from 60 you manage to live until 80. If this is the case only 10% of your portfolio in stock investment will most probably not be able to keep up with inflation. Especially the current economic situation. i prefer at least 30 to 40 % depending on market situations. Of course everyone of us is different in investment.
My 2 cents worth.

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
This should be the last installment of the series. Enjoy the read! Smile

Attached Files
.pdf   TODAY - December 3, 2011 (Charting Your Financial Goals).pdf (Size: 97.32 KB / Downloads: 67)
My Value Investing Blog:
I found this book titled "Show Me The Money" by Alvin Hall (330.024 HAL) which I think is a pretty good. For those with kids who like to read, this book will be a very basic "economic" book for them.
Extracts From Front Cover Of Sunday Times

Overspend first, be sorry later

Big spenders chalk up debts of more than a year's salary from splurging non-stop
Published on Nov 2, 2014 12:43 AM

Splurging on brand-name goods, holidays and clubbing, among other things, are some of the causes of debt, according to Credit Counselling Singapore (CCS). -- ST PHOTO: FM MAY YIP

By Yasmine Yahya

It is so easy these days to shop online 24 hours a day, book a trip to Europe on an instalment plan or even make an appointment for cosmetic surgery in Seoul.

So easy, in fact, that more Singaporeans are falling into the trap of overspending and chalking up massive debts.

Just over half of those who sought help at Credit Counselling Singapore (CCS) last year landed in debt after splurging on brand- name goods, holidays and clubbing, among other things.

"Debtors usually have more than one reason. They may overspend and then become more vulnerable to get-rich-quick schemes, time shares or gambling, and one thing leads to another and the debt gets bigger and bigger," said CCS president Kuo How Nam.

"But the first cause is usually overspending because many people are living lifestyles not justified by their incomes."

There may be more than 40,000 people who owe more than a year's income from credit cards and other unsecured loans such as personal lines of credit or overdrafts.

The Monetary Authority of Singapore estimates that 3 per cent of unsecured credit borrowers' debts exceed their annual incomes. Based on Credit Bureau (Singapore) data showing that 1.44 million people had at least one credit card account at the end of last year, The Sunday Times estimates there to be 43,000 people who had debts of more than a year's salary.

Last year, the average debtor who turned to CCS for help owed $84,447 to seven creditors, but Mr Kuo said that figure is skewed by gamblers, who owe the biggest sums. Most others have debts in the tens of thousands of dollars, and they make up a big group.

"A lot of it has to do with peer pressure or their own values. Some people say they feel they deserve to indulge themselves - they've worked hard, so they deserve to take more cab rides or a holiday even if they can't afford it," he said.

"I asked a debtor once, 'Why did you carry on spending like this?' And the answer was that he was hopeful that some day his income would rise to a level where he could pay off his debt."

Financial advisers say that is a common problem.

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