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TODAY MONDAY 20 JANUARY 2014

FINANCIAL FITNESS FOR KIDS

Beyond the piggy bank

Its never too early to teach your children about the value and importance of saving
One of the most important skills you can teach your child is how to manage his money. Experts believe its never too early to teach your little one about saving, budgeting and handling notes and coins. A report by researchers at the University of Cambridge commissioned by the United Kingdoms Money Advice Service revealed that money habits are formed by the tender age of seven. As a parent, you have the biggest influence on your childs spending and should teach him good habits that will serve him well for the rest of his life.
PREPARING FOR THE FUTURE

Teaching junior to save

One of the most important skills you can teach your child is how to save money. Heres one way to do it.

MAKE EVERY CENT COUNT

You can teach your child to follow a budget in the following ways: Use a combination of notes and coins in his allowance so he learns to handle different sums of money. Send older children to the supermarket with a shopping list and some money. Let them save any money left over after buying everything on the list. This teaches them to look out for the best prices when they shop. Let them pay for small expenses and learn to receive the right change from the cashier. BANKING FOR KIDS

Step 1: Explain the difference between needs and wants. Step 2: Teach your child the value of items. Step 3: Teach your child to save regularly. Step 4: Buy a clear container or a piggy bank so your child sees his savings grow. Step 5: Bring your child to the bank to open an account and let him grow his savings with regular deposits. Step 6: Use the bank account to explain the concept of earning interest.
ILLUSTRATION: ONG ZE TENG

BANK

These days, parents tend to spend more freely on their children, which means fewer children learn the value of money and the importance of saving. To make sure your child forms the right attitude towards money, a good start is to teach him the difference between needs and wants. Explain to him what necessities and luxuries are by pointing out items at the supermarket on your grocery shopping trips together. For example, the sack of rice or loaf of bread is a need while the box of chocolates at the snack aisle is a want. While youre at the supermarket, you can also teach your child how much an item is worth by giving

him S$5 and letting him decide what fruit to get. Your child will quickly learn that if he buys a less expensive fruit, he will be able to buy more of the fruit, or have extra money to spend on another item.
SAVE NOW, ENJOY LATER

Teach your child to save regularly. One way is to nd out what he wants to buy, then discuss with him the different ways he can set aside pocket money to save for the item.

Help him decide how much he wants to save each week to reach his target. To motivate your child, you can top up his savings if he hits a target, like saving 50 per cent of the total sum. The positive experience of saving to buy what he wants will likely lead to him repeating this behaviour in the future. And with Chinese New Year coming up soon, you can also encourage your child to set aside part of his hongbao money as savings.

As a parent, you have the biggest influence on your childs spending and should teach him good habits that will help him well for the rest of his life.

To let your child see how savings can grow, ask him to put small change into a clear container or piggy bank to pay for small items. This way, hell be able to see his savings grow. As your child starts to save bigger amounts, you can open a bank account for him. Many banks offer junior savings accounts that dont charge fees. Some offer incentives such as a S$1 gift deposit upon opening an account. Involve your child in the process by taking him to the bank where he can make his own deposits and withdrawals. This will make him feel responsible for his savings. You can also use this opportunity to familiarise your child with his bank account and to explain to him the concept of interest.
This is the 12th stor y in a 19-part collaboration between TODAY and POSB.

Give your child a head start in life through savings

FROM POSB EXPERT TOK GEOK PENG Senior Vice-President Consumer Deposits

WHY SHOULD PARENTS SET UP AN ACCOUNT FOR THEIR CHILD?

no need to worry about maintaining a high balance in the account. Furthermore, all coin deposit fees will be waived until your child turns 16 years old. Money can also be transferred easily from a parents account to the childs account for free.
HOW CAN I TEACH MY CHILD ABOUT THE IMPORTANCE OF THRIFT?

Knowing how his savings will benet him by allowing him to buy a new toy, for example will provide motivation for him to save, since we all save for an objective.
CAN I SET UP A JOINT ACCOUNT? ARE THERE OTHER CHOICES FOR PARENTS?

HELP BUILD YOUR CHILDS SAVINGS

To help your child grow his savings, you may want to leave standing instructions with your bank to automatically transfer a xed sum of money from your account to your childs. The set-up fee for standing instructions is waived with the POSBkids Account.

Opening a bank account for your children will help teach them the importance of saving and being more responsible for their own money. An account designed just for children is a good way to start. The POSBkids Account, for instance, earns daily interest and does not have the usual fees associated with a typical savings account. For example, you dont have to make an initial deposit and your child will receive a S$1 gift deposit in the new account. In addition, there is a waiver of the fall-below fees until your child turns 21 years old, so there is

One way to encourage your child to save is to offer to deposit extra money into his account when he meets his savings goals. For example, you can deposit S$10 when your childs account balance reaches S$90. When you are opening your childs bank account, use the opportunity to talk about the compounding effects of interest and how it works the more money your child deposits, the faster his savings will grow.

You can open a joint POSBkids Account with your child. If youre looking for other savings options, you ca n consider the MySavings Account. This service from POSB has the convenience of an automatic savings feature. It lets you transfer a xed sum of between S$50 and S$3,000 on a xed date every month from a debiting account to your MySavings Account. You also have the f lexibility of changing the monthly savings amount, the transfer date and the

Knowing how his savings will benefit him by allowing him to buy a new toy, for example will provide motivation for him to save, since we all save for an objective.
Tok Geok Peng
SENIOR VICE-PRESIDENT CONSUMER DEPOSITS

debiting account through POSB iBanking or at any POSB branches. You ca n a l s o acce s s you r funds easily at any POSB ATM or POSB branch, or via iBanking or mBanking. If your child is between the ages of seven and 15, you can consider letting him open a personal account. The account will be in your childs name so he can manage his own savings. Hell also be able to continue using the account as an adult.