2012, Arkib Berita, Forum, Keibubapaan, Masalah Pelajar, Pembangunan Sekolah, Rencana, Surat

MONEY: Teach young financial literacy

Email Print 05 October 2012 | last updated at 11:25PM

By Harintharavimal Balakrishnan, Skudai, Johor Baru | letters@nstp.com.my 0 comments

MONEY does not grow on trees. This is a typical saying uttered by our parents when giving us daily stipends during our schooling days.
Unfortunately, the way some children spend their parents’ money nowadays will remind you of this maxim.
It is sad the situation in this modern era has gotten worse. Children do not value money as we did during our time.
The culture of “I will get what I want” persists today and if something gets spoilt or stolen, just get another one, or even a better one.
The problem protracts when both parents are busy working. They seem to be compensating for the time they could not spare for their children by spending money on them.
It is disheartening that although we spend most of our lives worrying about money, the basics of it is not even taught in schools.
The introduction of subjects related to financial literacy would be immense.
Schoolchildren should be exposed to money management skills. Before they can be old enough to invest, they should also be taught basic money-making strategies such as property investments, mutual funds, shares and gold investments.
They should also be exposed to the positive and negative aspects of debts, especially on the excessive use of credit cards which may lead to bankruptcy.
Children must understand basic money management skills, such as living within a budget and handling debt.
We should realise that a solid financial foundation can lead to a lifetime of financial success.
Parents should be aware that one of the best gifts to impart is basic money management sensibilities. While others learn this after going through years of financial mistakes, parents should urge their children to start early, even before stepping into adulthood and the working world.
It is shocking to know that 90 per cent of people above the age of 65 end up broke. Our children need to realise the importance of saving and investing correctly for their later years.
The easiest way to educate the child on smart spending is to ask whether they really need something or is it merely to satisfy a desire to show off or be trendy.
To inculcate smarter buying habits, one should always weigh factors such as quality against price as well as the “needs” versus “wants”.
It is also important to wait at least one week before making a purchase. During this waiting period, there could be a sale or discount offered. More crucially, this will reduce impulse buying.
Teenagers also need to learn the difference between assets and liabilities. For instance, buying a car may appear like you have acquired an asset. In fact, it is a liability as the car value depreciates as soon as it is driven out of the showroom.
By being able to distinguish what is an asset (house, shares or mutual funds) and what is a liability (loans or credit card debts), the child will be able to discern that it is more cost-effective to accumulate assets.
It is always easier to instil good financial habits and foster a shrewd mindset rather than having to teach someone how to shed a bad habit later.
Financial literacy will also reduce the number of victims resulting from investment scams.
This will indirectly result in the reduction of suicide cases and crime associated with people desperate for money.
Middle-age bankruptcy can also be avoided and cases of seizure of properties due to failure to settle loans can be reduced as people would be more cautious of buying anything if they cannot afford it.
Financial education carries a slightly heavier importance in comparison with the long debated introduction of sex education in schools.
The older generation always reminded their children to prepare an umbrella before the rain. Financial literacy is that umbrella, vital to develop future generations who are well equipped with money management skills to enjoy good financial health in the future.

Read more: MONEY: Teach young financial literacy – Letters to the Editor – New Straits Times http://www.nst.com.my/opinion/letters-to-the-editor/money-teach-young-financial-literacy-1.152726?cache=%253Fpage%253D0%252F7.197525%3Fkey%3DKuala+Lumpur%3Fpage%3D0#ixzz28Nx17fY8


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