What I Want My Kids To Know About Finance

Schools are a great place for children to learn linguistic, math, and thinking skills. Unfortunately, financial education isn’t part of the syllabus in many schools. Hopefully, things will change.

But for now, I would have to assume the role of financial educator to my kids. As a young father, the following is what I want to tell them:

1. The true value of money

I hope you can understand that money is just a means to an end. Work towards having more than enough money so you do not have to worry about it but never chase after an additional digit in your bank account just for the sake of wanting more.

2. Money does not buy happiness

You cannot have lasting happiness through the purchase of material things. The new car or the new designer bag will not make you any happier than you want to be. If you have excess money, of any amount, I hope you find more meaning in using that money to help and empower those who need it rather than spending it on some frivolous gadget that’s the in-thing of the day.

3. Understand the time value of money

A dollar saved today will be worth a lot more in the future if you know how to invest. Learn to invest, plan for the future, and always live within your means.

4. Understand both the positives and negatives that come with the use of debt

Based on how you use it, debt can be a life-saver or a homewrecker. Only use debt to purchase assets that you are confident will generate returns that exceed the cost of your debt – and even then, be wary of the amount of debt you use. Don’t use debt to soothe your materialistic wants.

5. Money can be used to help

You need to understand that a hundred dollars can mean completely different things to different people. What you’d spend on a lavish dinner (I hope not!) can be more than someone’s monthly or even annual salary. Save a comfortable amount for you and your family, but use any excess to benefit different groups in society that need the money more.

6. One last thing

Money isn’t everything in life. But, I do not think that should be an excuse for me to not think about our finances. I want you, my child, to have the ability and time to pursue your own hopes and dreams. But in order to do that, I have to make sure you do not have to worry about money for survival. I hope you’d have this thought too when you become a parent yourself.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.