Teaching kids the 1, 2, 3s of money

With financial education, young people can be empowered to make the right decisions through life and prepare for their future. So it's a good idea to start building good money habits from a young age.

According to HSBC Malaysia CEO Stuart Milne, the lack of financial literacy is a challenge not just in Malaysia, but all around the world. With interest rates currently at all-time lows, Milne believes it's even more important that we understand how to manage our finances better, so that we can be prepared for the future.

Responding to this challenge, we have raised our efforts to enhance financial literacy in Malaysia, especially with young people. Working together with organisations like Teach for Malaysia (TFM) and the Financial Education Network (FEN), we are focused on helping parents to engage and teach their children about money from a young age. Our new FUN-nancial Guide, for example, is a fun tool created to support these goals.

Ultimately, we want to empower Malaysians to take charge of their own financial future.

Children develop habits, good and bad, when they are still very young – typically from three to five years of age. At that age, children spend most – if not all – of their time with their parents or family members. So to instil good financial habits, it makes sense for you to teach your young children the basics of money. You can do it right in your home, and it's easy to make it fun. 

Many of life's early lessons are learned through stories and fairy tales, so why not treat financial learning the same way? That helps to make learning about money and finances fun and natural.

Financial topics and financial management can seem like very dry and daunting subjects, even for some adults. So, giving your children two- or three-hour lectures on the topic isn't going to work.

Instead, incorporate financial lessons into everyday conversations. These will have the strongest influence on your children when it comes to money. Whenever there is an opportunity, talk to your children about earning money and spending it. Explain to them what a credit card is, what debt is, and the importance of savings and so forth. Children as young as two can understand the concept of money.

When you are managing your finances, share it with your children. Let them see you managing your household finances and budget and give them the opportunity to ask questions so they can learn about the importance of using financial tools.

As many parents will tell their children: money doesn't grow on trees.

Children, understandably, may not have a good grasp of the value of money. Like when they ask you to buy them an expensive new gadget or toy, or how much you earn. During instances like this, it's a good opportunity to teach your kids the value of things rather than the cost of things. Explain to them how money comes about, how you trade your services or products to earn money.

Giving your children an allowance is a good way to teach them about value and about managing money. By letting your kids spend their own allowance instead of just buying things for them, they learn to make decisions on how to manage and spend their money – whether to constantly spend it on little things or save up and buy only things they really want.

You can also reward your children with cash for doing chores around the home. This gives them the opportunity to learn about earning money and making their own decisions about how to manage the money they have earned.

Allow your children to keep or save their own money. Whenever they want to buy something, let them use their own cash so they can see their money going out. This way, they will stop and think "Do I really want to spend all my money on that item?"

Our FUN-nancial Guide is an online platform created in collaboration with Teach For Malaysia (TFM) to help you teach your children about the fundamentals of personal finance in an easy and interactive manner.

Designed especially for primary and secondary school children aged 8 to 15 and their parents, our guide uses a game-based approach and real-life scenarios to help your kids understand concepts related to money and to take charge of their financial life.

The guide features five modules which cover different aspects of personal finance:

• understanding needs versus wants
• goal setting, budgeting and spending
• spend wisely for shopping
• protection against scams
• the concept of inflation and short/long-term planning

Building a culture or habit takes time. To change how your children approach and see money will take time. To create a culture of financial literacy within your children, it needs to be part of your everyday life together.

Above all, be patient and keep repeating positive messages. Creating a consistent environment where your children can experience money management and talk about financial topics on a daily basis, will make a bigger impact to help shape good financial habits.

If you haven't started the conversation with your children about money, now is a good a time as any to start. If you need some guidance or ideas, check out our FUN-nancials Guide.

Meanwhile, if you'd like to build good savings habits in your children early on or start mapping out a financial future for them, you might want to check out our Junior Top Rate Statement Savings Account or our Junior TopRate Statement Savings Account-i.¹ Speak to your Relationship Manager to find out how you can open an account for your kids.