If you have young children then fast-forward 10 or 20 years and imagine those precious little bundles of pride and joy all grown up, hopefully having graduated with honours before taking a well-paid job and raising a family of their own. The question is, how can we set good financial foundations now that will better equip them later in life?

The Three Days Rule
Teach your children to be patient and ask them to wait for at least three days to think about whether they really need the toy they are asking for – they might decide they can live without it, or that there’s something else they would rather spend the money on.

Unlimited wants but limited resources
When your children ask you for two things, tell them that you can only buy one of them and that they have to make a choice, regardless of whether you can easily afford both items. If your child makes the wrong choice and comes to regret the decision, don’t allow them to have the other item too soon – encourage kids to make careful decisions.

Working for money
I’m not suggesting children should find work and neglect their studies, but they should learn that making a living is not as easy as it sounds. Find ways for them to experience this for themselves – this could mean a vacation job, or helping out a relative or close friend that you know.

Paying themselves first
Our children may not necessarily need emergency funds, but it is a good virtue for them to learn how to save from young. That way, they know there will be money at the end of the month, rather than waiting to see whether there is any money left after all their spending.

Making their money work for them
My children are still young, so I take and invest their ang pows for them, but when they are old enough I will introduce them to savings and fixed deposits, then I’ll move on to more sophisticated instruments such as bond and equity funds when they can better understand them.

Helping others with their money
Just as surely as we want to train our children to become money-smart kids, we would not want them to grow up to be selfish adults either, hoarding their money all for themselves. Children can grow up to be money-smart adults who are also caring and cheerful givers, if parents set the right example. Talking of which…

Lead by example
If we tell our kids to wait three days to think things over before making a purchase, but we ourselves buy on impulse in front of them, we have no credibility. As the saying goes, we must talk the talk and walk the walk.

THIS ARTICLE IS REPRODUCED COURTESY OF SMART INVESTOR MAGAZINE