When I was a kid, my parents never taught me about money.
What I would always hear from them was their lack of money and how they struggled financially. Because of my parents’ behavior towards money, I grew up thinking that it’s hard to earn money, that money doesn’t grow on trees, and that we should eat our entire meal because some kids are starving.
When I moved to Manila to study college, I also struggled with money. My parents did their best to support me financially, but it wasn’t enough. I had to take part-time jobs just to make ends meet. When I graduated college and got a full-time job, I promised myself that I will never ever have an empty pocket again. I committed to work hard, earn money, and save some for the rainy days.
And now that I am already a parent, I realized that it is my responsibility to teach my child about money management. I don’t want my daughter, Macey, to go through what I went through during my younger years that’s why I’m learning more about saving and investing so that I could it pass it on to her and hopefully it could help her when she makes financial decisions in the future.
Here are some of the things I teach Macey about money and where we save and invest her money.
I started teaching Macey about saving money when she was 2 years old. Even if she didn’t understand the value of money yet, I told her that if she saves her coins in the piggy bank, she can buy more books and toys.
A piggy bank can be a great way to teach your kids the importance of saving, while giving them an easy way to do it. Tell your kids that the goal is to fill up the piggy bank with bills and coins, until there is no room. Illustrate that the piggy bank is for saving money for the future and that the more they save, the more their money will grow.
We always look forward to BooksForLess’ annual warehouse sale because that’s when we open her piggy bank and buy her books using her own money.
COL Financial – Stock Market Account
Once the piggy bank is full, take your child to the bank or to a stock market broker to open up a savings account for them. Have them count how much money is going to be deposited, so they can have a physical understanding of how much money they have. Show them the final number and reinforce the idea of interest. It can provide a great source of motivation for your kids if they understand that their money will grow over time as long as they don’t touch it.
On Macey’s 3rd birthday in 2016, we personally went to COL Financial’s office at the Philippine Stock Exchange Building in Ortigas to open her first stock market account for her college fund.
BDO Junior Savers Account
We also opened a BDO Junior Savings Account for Macey when she was 5 years old. This is where we save short-term funds for her school expenses such as tuition and miscellaneous fees in Pre-school and Grade school.
Barangka Credit Cooperative
I also opened a BCC Kiddie Savers Club Account for Macey at Barangka Credit Cooperative (BCC). The initial deposit is only PHP 100 and the interest rate per annum is 1.5% which is way higher than what the bank offers. They also gave her a free piggy bank which made her more motivated to save money. When her piggy bank is full, we bring it to BCC, and she helps the staff in counting the coins before depositing it in her BCC Savings Account.
We intend to use this account for Macey’s “PLAY” fund to buy her books, art materials, and toys.
When she really wants the latest toy or an expensive book or computer program, we tell her that she will have to save up for it. To encourage saving up for her goals, I taught her how to make a vision board by putting pictures of her desired toys or items on the wall, so she has a visual reminder of what she is working and saving towards.
How To Teach Kids About Saving Money
As parents, it is our responsibility to teach our children about money so that they’ll be prepared to face the various financial decisions throughout their lives. By instilling strong financial habits early on, our kids will be prepared to conquer common challenges as they get closer to adulthood.
Although many schools attempt to teach basic financial literacy to students, the responsibility falls to the parents to apply those lessons to real life. Learning how to count change in the classroom is very different from getting a real allowance, creating a budget to help our kids buy the things they want, and opening a savings account or starting their own business.
If we don’t teach our kids how to manage money, somebody else will. And we don’t want to take that risk!
Here are some tips to teach our kids about saving money.
Teach Them The Value of Money
Most of our kids have little to no concept of money. They know that if they want something at a store, mom or dad just need to reach into their wallets for that never-ending supply of bills and coins. They have a vague understanding of how their parents get them food, clothing and toys. It seems to a child as though people just go to the store, get what they want, and leave.
So, whose responsibility is it to teach them how to handle money?
Without the proper education in dealing with money, our children are at risk of becoming financially irresponsible in the future. The important lessons about money that we need to teach our children may seem basic to us at first, but we need to explain it to them in depth to make sure they know all they need to know to get by in the world.
It’s never too young to start.
After reading “How to be a Money-Smart Parent and Raise a Money-Smart Kid” book by Dr. Marnie Moya-Prudencio, I decided to start teaching Macey the value of money and its denominations. It was easier for her to learn and memorize the denominations of Philippine coins and bills because she’s already familiar with colors and numbers,
Learning to recognize each coin and what it does from a very young age is the most basic lesson in learning how to manage money, but it provides the foundation needed to understand how it all works.
Aside from teaching them the different denominations, we also need to explain to them why we need money and where we use it. For example, we can tell them that in order to get food and toys and clothes, we have to give the store money first.
It’s also important to teach them that money can be a powerful tool to help others. We don’t only use our money to buy things that are important to us, but also to give back to other people that don’t have much stuff. We can teach them about tithing and giving to charities or other communities even at a young age.
This week, we packed some of our old stuff including clothes and toys and we’re giving them away to those who have been affected by the recent typhoons. We are also planning to give cash donations online.
Give Them a Budget
- 10% Tithe or Charity
- 10% Savings
- 80% Expenses
- ₱100 Tithe or Charity
- ₱100 Savings
- ₱800 Expenses
Then, I gave her 10 pesos (10 pieces of 1-peso coins) and I told her to budget that money based on the same percentages that I used in our family budget. She happily divided her 10 pesos this way:
- ₱1 Tithe or Charity
- ₱1 Savings
- ₱8 Expenses (for toys, books, or art materials)
By instilling these habits while they’re young, it’ll be easier for them once they’re dealing with larger sums of money. I also explained to her the value of tithing or giving by telling her some bible verses, and the value of saving including short-term and long-term goals.
The first step in teaching kids the value of saving is to help them distinguish between wants and needs. I explained to her that needs include the basics, such as food, shelter, and clothing, and wants are all the extras. I used our own budget as an example to illustrate how wants should take a back seat to needs in terms of spending.
Macey may have not understood everything that I taught her about budgeting and saving, but at least she got the idea about money.
Make Them Part of the Process
Children learn by example, so the best way to teach our child about saving money is to save money myself. I have my own piggy bank that I put funds in regularly and I also showed her some of our bank accounts and their purposes.
When I’m out shopping with Macey, I encourage her to join me in saving money and I show her how to discern between various prices and explain why buying one item makes better sense than another.
For example, before we go to the grocery or wet market, I ask Macey to make our grocery list. At the grocery store (before the pandemic), I would ask her to find the right items and compare prices. Aside from knowing which items are more expensive and less expensive, I also explain to her why going for the cheaper items is not always the best thing to do especially if the quality is compromised. That’s why before she puts the item in the cart, she asks me first if the cheaper item is of good or equal quality with the more expensive one. Then, we decide which one to get and I let her hand the money to the cashier and wait for the change.
I also explain to her why we buy most of our food supply at the wet market. Not only are they cheaper, they also are a lot fresher at the wet market compared to the supermarket. This is a good exposure for her not only to know where we buy food but also to have great respect to those who worked really hard so we could have food on our table – from the farmers and fishermen to the vendors.
Be Open and Honest About Your Finances
Setting an example is the best way we can teach our kids about saving, so when our children are old enough to understand, we can let them in on the family finances. Whether it’s explaining how much the mortgage costs or what utility bills to pay for, we can get them involved in the conversation.
It’s OK to share your salary, too. Explain that they shouldn’t discuss it openly, but it’s important for kids to see what happens when you work hard. Celebrate your promotions and raises with them. That way, they’ll know how your income affects the family as a whole.
Money doesn’t have to be scary or a taboo. An innocent question such as “Are we rich?” can be answered in a way that emphasizes family values, such as hard work and responsible spending. Asking good questions can get them to think long-term and have a positive relationship with money. Letting them know you’re always open to have a conversation about money can encourage them to ask questions of their own to keep learning.
Whether you’re using gift checks at the grocery store or transferring funds on your phone, let your kids see what you’re doing. Answer their questions and explain the reasons behind your decisions. Show them that they can ask any financial questions they want, and don’t be afraid to admit your mistakes — it might just help them avoid making the same one day.
Kids are never too young to learn about money. The earlier we teach them about money the better for their future. Kids who learn about money early on will likely manage their finances better when they grow up.
Teaching kids how to save money may seem like a tough task. But using these tips, you can make your child’s understanding of money fun and accessible. It’s an investment in knowledge which truly pays the best interest.
By teaching our kids foundational principles of spending and saving at an early age, we can help them form positive financial habits that will last their entire lives.
While I did figure out all these things on my own, I don’t blame my parents for their lack of financial planning or money management skills. I respect and honor them and I’m grateful for all that they’ve done for me and our family. More than anything, I’m grateful to God for his grace and provision. Everything that we have comes from Him. We are just stewards of his blessings.