MANILA, Philippines - Many parents are faced with the challenge of teaching their children how to deal with money.
Financial literacy advocate, columnist and author Rose Fres Fausto said she taught her three sons how to deal with money, along with reading and writing.
Fausto shared some tips on how she raised her sons 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 P500, 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.
Fausto said parents should teach kids about money, but also with the right values. Parents should also set a good example for their children.
Fausto recently partnered with PSBank to provide advice for parents who want to teach their kids high "FQ."
PSBank offers Kiddie and Teens Savers Account. 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.