"Don't worry about money. Concentrate on your studies. Leave money matters to us."
This is something well meaning parents might tell their children but this is an example of how a good intention might actually be taking a step backward.
More enlightened parents will encourage their children to save money, highlighting the virtues of saving. This is probably the most basic level. Parents who don't even do this are doing a poor job of parenting. I won't mince my words here.
Financially savvy parents might, then, take their children's savings and invest in income generating assets. This will help to build a stronger financial foundation for their children. If the parents do a very good job, the children could have an easier time in adulthood.
Financially savvy and more enlightened parents will teach their children the ways to make money work for them as early as possible. This is a case of teaching someone how to fish and not just giving a basket full of fish to him. Parents who fall into this category are probably very rare. Well, at least I have not met any yet.
I blogged about how I got my primary school going niece interested in investing before. She understands not only why she should be saving money but also how she could use her savings to generate passive income now. It is not enough to save money, she has to make the money work for her.
Some might tell me that children should enjoy their childhoods and I am being too realistic. Well, I never did believe in Santa Claus as a boy. Seeing how my dad's business almost went bankrupt and the problems it caused for the family when I was in primary school forced me to grow up rather quickly. No Santa Clause came during Christmas to drop us any goodies.
We could have financial problems one day if we do not do the right things today. Be realistic.
Financial problems will not magically disappear. Be realistic.
What is the best thing to do?
Be prepared and get everyone in the family involved, yes, including the children.
I see some parents coddle their children to the extent of spoiling them. I am sure examples of such parents are pretty common in Singapore. I see them all the time.
The economy has been chugging along in Singapore and unemployment rate has been low and many people are drunk on cheap money. Conspicuous consumption has risen.
If you buy things you don't need, you will soon sell things you need.
- Warren Buffett.
If you are reading this blog post, I gather that you are interested in achieving financial freedom. If you have children or when you have children, please take the next step.
Your children will thank you in future.
1. Teaching young children financial literacy.
2. At what age to start investing in stocks?
3. Rich Dad, Poor Dad: 2 are better than 1.
4. Little Book That Beats The Market.
5. Warren Buffett: Illustrated.