Financial Literacy For Children: Start them Young

This article requires an average reading time of 4 minute 28 seconds. 


As a parent, we want the best for our children. It is less about buying the best clothes, latest toys, or coolest gadgets, and more about wanting them to be happy, safe and secure. We want to lay a foundation that they can build upon to achieve whatever they want to in life.

I often ask myself — being Singaporean with a somewhat ‘Kiasu’ (scared to lose out) outlook — am I falling prey to the rat race and pushing my children to academic excellence? Am I putting too much pressure on them such that they are not enjoying their childhood?

I try to ask myself regularly, “Am I teaching my children lessons that impact how well they do in life?” Having graduated from a local university with a degree that is not related to my current profession, I understand the importance of imparting life skills to my children as early as possible so that they have all the information they need to make informed decisions throughout their lives.


One of the most important lessons I have begun teaching my children about is money.


Why is teaching children financial literacy important?

Did you know that research suggests many of our financial habits are set by age seven? Good habits that are formed early go a long way to point our children in the right direction. As children grow up so quickly, it is essential that they begin to grasp important financial concepts —such as how to save and spend — when they are young. It will give them many years of practice before their choices begin to impact their future in a significant way. Learning about money in these early stages will better equip them to make good choices later on. I believe that if we want to play a key role in shaping our children’s thoughts, feelings, and values about money, we need to give them the gift of financial literacy as early as possible.

6 ways to teach financial literacy to children

1. Let them observe you at a young age

We are the first ‘teachers’ to our children. They learn by observing our actions. This is why a good way to begin teaching your children about money is to allow them to observe how we make purchases.

Even in this digital age when we use our debit or credit cards to make purchases more than we use cash, we can show our children our receipts and explain the items and prices listed. By repeating this simple process, it helps your child understand the value of goods and services, and how spending habits impact your bank account balance.

2. Cultivate a habit of saving

“Daddy, I want to buy this toy.”

Our children’s first interactions involving money are most likely associated with spending. They see how a few pieces of ‘paper’ or just a tap of a plastic card can allow them to bring home their favourite toy. But what is more important is to teach our children that money isn’t just for spending – they should be saving money regularly too.

Learning to save isn’t just an essential money habit. I believe that saving teaches discipline and delayed gratification. There are plenty of things they may want to do or things they may want to buy that cost money, but they may not always be able to do this due to budget limitations. For example, a visit to their favourite toy shop will involve using money to pay for toys. By explaining to them that they will need to save up to buy what they want, They will understand the importance of spending wisely. My favourite occasion to do this is after Chinese New Year when they count their Ang Baos and save them physically in their piggy bank.

Over time I have taught my children to recognise the price of their favourite toys. I also take time to explain to them how long will it take for them to save their allowance, based on how much they are willing to save daily or weekly. Some toys could take a few years to save up for, so I jump on the chance to ask them if they would like to choose a cheaper toy instead.

This helps them to learn how to spend within their means too.

3. Create opportunities to earn money

The simplest way for children to learn about earning money is to pay them small amounts to help out with household chores at home. However, you should also set some ground rules to outline basic chores that they have to do without pay, as their contribution to helping out at home. This is important as children value money they earn differently from money they receive. Other opportunities for earning could include fundraisers at school or flea markets where they can sell handy crafts or old clothes, and then donate to a charity of their choice.

4. Teach them the value of giving

We all come from different backgrounds. It is important that our children learn the value of money through giving to others who are less fortunate. This shows them that money is required for basic needs, while also teaching them how to budget and bless others with extra money that they have. You can help your child plan to put aside some of their savings to donate towards causes they would like to support. For younger children, we can start by getting them to put aside their old books and toys for donation to other children or charities.

5. Teach them how to grow their money

This is one of the hardest, but most crucial subjects to teach children about financial literacy. One of the simplest methods I have found to teach my younger children this is through playing board games. “Monopoly Junior” is a good start with other fun options such as Hasbro’s “Pay Day”. Another way is to introduce easy-to-read books for primary school goers. “If You Made a Million,” written by David M. Schwartz explains the basics of money.

6. Be the best role model

We, as parents, are the best role models for our children. If you want your children to develop good spending and saving habits, you need to set a good example. You need to show them that it is important to have money saved and that it is okay not to buy everything they want. Parents should make sure that they are not buying things on impulse or just because their children ask for them. They should also explain what they will do with the extra money if they have more of it in the future.


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Disclaimer: All information, commentary and statements of opinion contained in this publication are for general information purposes only. They are not intended to be personalized financial or investment advice as they do not take into account your individual circumstances. You are advised to speak to a qualified financial consultant before making any financial decision. This publication should also not be construed as an offer or solicitation to purchase or sell any insurance or non-insurance products including any that may be mentioned here. Whilst we have taken all reasonable efforts to ensure that the material contained in this publication is accurate and informative, and the author of this article do not warrant or guarantee its accuracy, reliability or completeness., its employees, parent, related companies, agents and the author of this article will not be liable for any direct, indirect, incidental or any other type of loss or injury resulting from your use of this content.
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Shu Ming has over 15 years of success in the financial advisory industry and is one of the pioneer managers in his advisory group. Today, he serves an extensive network of long-term clients who appreciate his impeccable service and advice, while leading the advisory group to be the top group in the firm he is currently in. An accredited ChFC®, Shu Ming’s wealth of experience and knowledge enables him  to serve a wide demographic of clients – from mass-market, to mass-affluent and high-net-worth individuals. As one of the top 10% advisors in the independently-owned financial advisory firm he has been in since 2008, Shu Ming has won numerous awards including the globally recognised MDRT certification. Shu Ming’s goal is to help clients achieve financial freedom as early as possible so that they can spend time doing the things they love. His youngest clients retire at the age of 35 years old. He is also passionate about sharing his knowledge freely with his team and with new advisors as he believes in the importance of paying it forward. Shu Ming can be contacted at

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