[Executive Edge] 7 ways to make kids money-savvy this Christmas and beyond

The Christmas season is a time of giving, and for many Filipinos, this is synonymous with spending. We buy gifts for our loved ones, treat ourselves with our 13th month pay, and attend Christmas parties across the metro.

Yet as financial experts recently shared, we can still have fun over the Christmas season without destroying our budget. We should extend this same thinking to our children: If adults can spend more responsibly this holiday season, how can we teach our young ones to do the same?

This goal is necessary because financial literacy is not learned overnight.

So what better way to teach children the necessity of financial responsibility than during the season when most Filipinos are anything but?

Here are their money-savvy tips to share with your children:

1. Communicate your lifestyle and purchase decisions to them

Investor and financial adviser Burn Gutierrez emphasized the fact that children do pay attention to how you spend during Christmas. As such, you should make sure that what you yourself practice good spending habits.

“Children do listen and observe whenever parents discuss things such as not using credit cards to buy things that you want, how saving and investing can give us financial independence in the future, or how good the quality of an appliance is that you bought as a Christmas gift for a cheaper price,” he said.

Gutierrez thinks children will be able to learn through osmosis. “When you show your kids that you value your work or entrepreneurship and that you are dedicating that to them, you can expect your kids to grow in frugal lifestyle and simplicity as well,” he said.

Motivational speaker Jayson Lo shares the same sentiments. “Teaching kids this age about money is a bit of a challenge, and you need to be very visual when you give them instruction,” he said. “I discovered that the best visual aid for my kids to learn about money is me.”

Lo continued, “Parents should set an example, especially in areas like working, saving, and giving. They say, ‘values are caught not taught,’ and that includes money values.”

As an example, Lo pays his daughters commission for simple work, such as giving him a massage. “If they massaged me for just a few minutes, I give them a smaller amount. If they do it longer, I give them more,” he said. “Then I explain to them that we need to work hard to earn money to provide for our family.”

2. Buy them stocks as a Christmas gift

Financial consultant and entrepreneur Marvin Germo said, “I don’t have kids yet, but one of the things that I would do when I have kids and grandkids is that I would give them stocks as their Christmas gifts.”

He would not just do this for one or two Christmases, but for 20 straight Christmases. “By 20 Christmas celebrations, they would see how big their initial investments would have already grown, plus the dividends those stocks would earn each year. This way, they become savvy not just by theory but also learn practically and benefit financially from the learnings.”

To him this is the best gift that we can give our young loved ones. “The greatest lesson we can teach our children is the value of time and how we could let our money grow big over a period of time,” Germo said, and added that he would have invested his cash gifts as a child into stocks had he known the value of investments then.

3. Encourage them to save some of their Christmas money

Financial adviser and planner Argel Tiburcio thinks it is important for parents to “teach kids to save a portion of the money they collected from Christmas presents.” Even as little as 10% to 20%, he says, is a good start.

Relatedly, Tiburcio recommends that parents reward such saving by opening a junior savings account for them. Financial literacy blogger Kristine Licuanan shares the same recommendation. “To make it fun, bring them personally to a bank and open an account for them,” she said. “Ask them to sign the papers, and if available, give them their own passbook.”

Both Licuanan and Germo encouraged parents to adopt a matching policy. “Tell them that you will match whatever amount they want to put in their savings account,” Germo said. As an example, Licuanan said, “If they have saved P500 ($11.17) per month, you’ll add another P500 ($11.17) to make it P1000 ($22.33).”

Germo suggested, “This will make them associate good and enjoyable feelings to set aside money as savings.”

4. Encourage them to spend their Christmas money wisely

In addition to encouraging kids to save, blogger and entrepreneur Fitz Villafuerte also emphasized the need for parents to teach their children to use their cash wisely.

“They deserve to spend freely the rest of the cash, but encourage them to spend it on something they need, rather than something they want,” he said.

Of course, most children will not inherently know how to distinguish what they need from what they want, so the responsibility falls on parents to relate this concept to them. “Properly explain to them why it’s important to spend on ‘needs’ first before ‘wants’ but let them ultimately decide,” Villafuerte said.

5. Teach them the value of entrepreneurship

Tiburcio thinks that the Christmas season is the perfect time to encourage young children to be entrepreneurs, especially when everyone is feeling so generous.

“Buy them bite-sized candy bars or choco polvorons that they can sell when they visit their aunts, uncles, grandpas, grandmas, godfathers, and godmothers,” he said and added, “who can resist cute kids selling?”

Tiburcio believes this imparts a valuable lesson to our youth. “They will associate positive feelings about selling and it’s a priceless experience that they’ll hold onto as they grow up,” he said.

6. Manage their expectations when it comes to Christmas gifts

Financial literacy blogger Jill Sabs thinks that parents need to make it a priority to keep their children’s expectations in checks when it comes to gifts. “I think one way to help kids be financially savvy during Christmas is to not create an entitled monster who expects a mountain of presents,” she said.

Sabs thinks that parents can accomplish this by buying them a single meaningful gift as opposed to a smorgasbord of presents. “By giving them something meaningful instead of a dozen knick-knacks that will be forgotten even before New Year rolls in, you’ll help them be more appreciative of what they have and lessen their chances of consumerism and addiction to stuff when they grow up,” Saab said.

7. Teach them the importance of spending money wisely year-round

Investment adviser and bestselling author Efren Cruz said, “it’s like the tail wagging the dog if we just teach our children financial lessons only during special occasions like the holidays. Handling money must become second nature to an individual because it involves a lot of thinking and maneuvering.”

As such, Cruz thinks the greatest gift we can give children during the Christmas season is an emphasis on year-round financial smarts. “Perhaps the best lesson for children on being financially-savvy during Christmas is to be financially savvy the whole year and even with the little things like saving a few pesos off their baon (allowance),” he said.

He added, “if they want to buy something during Christmas, they should save up for it.” – Rappler.com

Rappler Business columnist Ezra Ferraz is also the chief content officer at ZipMatch, a tech company backed by Ideaspace Foundation, Hatchd Digital, IMJ Investment Partners, and 500 Startups. He brings you Philippine business leaders, their insights, and their secrets via Executive Edge. Connect with him on Twitter: @EzraFerraz

 

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