Money talks for kids

Before they turned 12, brothers Teo Keane and Teo Zern already understood financial concepts such as fixed and variable expenses, income and interest, thanks to their mother, Madam Lum Yin Peng, 44, who made it a point to teach the boys about money.

It was a way to teach them important life lessons, such as delayed gratification and managing a budget, says the stay-at- home mum and freelance writer.

She started giving her sons, Keane, 15, and Zern, 13, a small allowance about five years ago when the family was living in China, where her husband, Mr Teo Seow Ling, 44, was working at a multinational firm that handles logistics for petro-chemicals.

"Keane was around 10 and Zern, eight. If they saved all of their allowance, they would get an interest of 5 per cent on it. If they spent anything, they would not get any interest. I wanted them to understand the meaning of delaying gratification - enjoying something now or getting a bigger thing later," says Madam Lum.

The boys did not spend a cent as necessities such as meals were provided at the international school they were attending, though they do not recall what they bought with the extra pocket money.

When they were 11 and nine, Madam Lum wanted them to learn to manage the household budget.

"I showed them the household's expenses versus income. I wanted them to differentiate between fixed expenses, such as utility bills and insurance premiums, and variable expenses, which you can control, such as eating out, books and toys," she says.

"They asked, 'Are you sure we can afford all this?' They began to understand a bit better why I tell them to switch the fan and lights off when they are not in use. Money is not everything but money is important."

Today, Keane and Zern live within their means on their $120 monthly allowance. They do not have an "entitlement mentality" and their mother manages any expectations surrounding gift buying.

"If they want something for their birthday beyond the $30 budget, they will top it up with their savings. The younger boy once wanted a Lego set that was about $80. His aunt and I paid $30 each and he forked out $20," she says, adding that the family does not celebrate Christmas.

Unlike Madam Lum, many parents shy away from talking to their kids about money, experts say.

"Most parents don't want to talk to their children about it, for fear of instilling the idea of making money as the only goal in life. But the fact is that children need to learn about money; to be more specific, they need to learn about budgets. They must be educated on the notion of needs versus wants, and that money, the idea of a budget, is finite," says Associate Professor Jeremy Goh from the Lee Kong Chian School of Business at Singapore Management University (SMU).

Dr Koh Noi Keng from the National Institute of Education (NIE) says that children show a "marked and sudden increase of interest in money" between five and seven years old.

"A child's money habits may become set by as early as seven years old."

So start them on money education, urges Dr Koh, who chairs the Citi-NIE Financial Literacy Hub for Teachers, which promotes financial education.

"The process of a child's financial socialisation may begin as early as three years old when children start demonstrating (things such as) advertising knowledge, brand knowledge and material motives and values. So start early…. You won't know how much they are absorbing and whether habits are already starting to form. Don't miss those formative years," she adds.

Dr Larry Haverkamp, adjunct faculty member of SMU School of Economics and an American who has lived in Singapore since 1990, used different strategies to teach financial literacy to his daughters, Larrissa, 19, and Larrinna, 16.

"Our family's experience has been that games work best at primary school age. Any game where notes are among the play pieces should work well. We found our children liked Monopoly and learnt from it, especially in Primary 5 and 6," says Dr Haverkamp.

"Money means more in secondary school and we found an allowance worked best to help their appreciation of money. Our children did household chores on Saturday mornings between 9am and noon. They earned a weekly allowance of $15 for these chores, and the regularity of it was helpful. The children felt they missed something if there were no chores on a Saturday, so we always made some work for them."

Ms Christina Ho, 41, an administrator at a clinic, has been encouraging the older two of her four sons to save - in both traditional and unconventional ways - since they started handling money in Primary 1 when they could buy food in the school canteen.

Aloysius, 10, and Ignatius, nine, can take home-cooked food to school or spend their weekly pocket money. They put any money they save into their piggy banks. Ascensius, six, and Dimitrius, three, are too young to have pocket money.

Another way she teaches her children about savings is via a reward scheme using a stamp or chop, similar to points redemption schemes used at supermarkets.

"For example, we didn't want them to eat too slowly. Whoever finishes dinner within 25 minutes gets a stamp on a sheet. They can redeem treats or small gifts, such as ice cream at McDonald's. If they want something, they can redeem it and not spend money on it," says Ms Ho.

She adds that she and her engineer husband, Mr Brendan Khoo, 40, allow the children to combine the stamps accumulated, with the three older boys "cashing in" for Wii games after accruing 50 or 60 stamps.

As for clamouring for presents, her children are "quite controlled so far", says Ms Ho.

"They don't get everything they ask for, though, like all kids, they will try their luck. I tell them, it's not your birthday or Christmas, you have to wait. During the Christmas season, for example, I'll ask them to be reasonable in their demands," says Ms Ho.

Freelance copywriter Caroline Mowe, 40, says she and her husband, Mr Nick Mowe, 40, a finance director at a commodities firm, want to convey to their two sons ethical values.

"Zachary, 10, and Christopher, six, don't get pocket money. The older son takes a sandwich to school. He doesn't like school food and is given $2 for lunch if he needs it," says Mrs Mowe.

"We're teaching them, however, that money is a tool for helping others, not just to use ourselves. It's not about saving more for ourselves. The money we don't use can go to helping others who are less well-off."

She demonstrated this philosophy to them on a recent grocery shopping trip to FairPrice, where members of the Boys' Brigade were outside the supermarket accepting donations such as milk powder, noodles and sardines for needy families.

Mrs Mowe told her sons that a small set of Play-Doh might cost as much as five tins of sardines and the family picked up some food items to give to the Boys' Brigade.

Ms Rasidah Ismail, 37, an administrative assistant with SingHealth, talks to her sons - Muhamad Rayyan, seven, and Muhamad Rifqi, six - about money in a language they can understand.

"We associate money with what they like, such as toys and holidays. If they shower, I tell them not to waste water, but I can't relate that to the cost of utilities, which they don't understand. I say that I have to pay more if more water is used, and that money can be used to buy toys for them," says Ms Rasidah.

"They like to go on holidays to Malaysia or staycations in Singapore hotels. I told them I went back to work this past week after maternity leave caring for their three-month-old sister Nur Kasih because I need to work so that I can get more money for us to go on holiday."

The boys prefer holding coins in their hands to putting them in the plastic Coke bottles they use as piggybanks. They got upset when their parents put their Hari Raya money in the bank's cash deposit machine, which they saw as "swallowing" their money, says their mother.

Nonetheless, Rayyan is beginning to understand more about saving up for a treat. Last year, he used the money he got for Hari Raya to treat his grandmother and little brother to a meal at Fish & Co, says Ms Rasidah.

This article was first published on Dec 21, 2014. Get a copy of The Straits Times or go to for more stories.