As the Lunar New Year is fast approaching, the festive season brings joy to children as they collect Ang Pows (red packets with money) from their elders. For many parents, this is a timely opportunity to introduce the concept of money management and financial literacy which will give their children a solid foundation for a lifetime of making sound financial decisions.
The meaning of giving Ang Pows is to bestow happiness and blessings on the younger generation. Come this Lunar New Year, parents can teach children to be self-reliant, responsible and build a healthy relationship with money.
Financial education should be regarded as a lifetime, continuous process. Parents could consider the four steps below to cultivate children’s financial concepts and skills.
Step 1: Saving
Saving is the first financial concept for children to learn. Parents can open a savings account with their children. By embarking on the savings journey together, children will have a better understanding of savings and the function of a bank.
Step 2: Spending
Parents should guide their children to thoughtful and responsible spending such as encouraging them to list things they would like before purchasing, whilst defining the difference between wants and needs. This is an important aspect of instilling the concepts of financial responsibility and cultivating the ability to make smart choices.
Step 3: Investing
As children become aware of money and other financial concepts, this is a good time to show them the power of accumulated wealth. The basics of investing can be taught when children are between eight to thirteen years old. Parents could show their children what financial instruments they own and explain why they chose to invest in those products.
Step 4: Giving
It’s also equally important to change the focus to giving rather than solely receiving. Parents could encourage children to help the less fortunate by donating to charity or supporting a worthwhile cause. This is a great chance for children to connect with society, and establish a social responsibility that will have a positive impact on their future growth.
The lunar new year is when many children get to handle their own money for the first time and it is a great starting point to begin wealth management and financial education. Encouraging children to hold responsible views about Ang Pows and wealth at different stages of their lives reflects the respect of parents for their children, nurtures their ability to accumulate wealth and establishes a concept of money, consumption and values from an early age.
Written by: HSBC Malaysia
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