Kids must be taught the value of money

Yueqianzu, or people who are in debt at the end of every month, has edged out yueguangzu, or people who spend all their income by the end of every month, as the new buzzword. Unfortunately, neither group knows how to handle money well, and that reflects the lack of financial education in China.

Some children reportedly received up to $3,000 as gift money during Spring Festival. But instead of helping their children properly manage the gift money, an overwhelming majority (about 80 percent according to a survey) of Chinese parents decided to use the money in their own way, which shows that they don't know how to cultivate financial quotient (FQ) among their wards.

Chinese people have a long history of managing money, and managing it well. Shells were introduced in China way back in Xia Dynasty (c. 21st century - 16th century BC). But the wisdom of our ancestors seems to have been lost on today's society. No wonder, China's existing current financial system and wealth management theories have been borrowed from foreign countries.

According to the first FQ Index Report, issued by Ping An Insurance and Horizon Research Consultancy Group in 2011, more than 90 percent of the university students in China are short on FQ. Many don't even know the basic concept of money.

Cultivating FQ among children should be an essential part of family education. Parents should make their children realize that money is a double-edged sword; it is good if it is put to good use and evil when not handled properly. They should pass on their knowledge of wealth management to their children through everyday activities.

The key to developing a child's FQ lies in the cultivation of healthy habits. This concept has been put into practice in many advanced countries. In the United Kingdom, for instance, children between the age of five and seven are introduced to wealth management courses which help them understand the different sources of money. Children in the seven-to-eleven age group are taught to manage their own money and learn to save for the future.

In Japan, parents usually teach their children that everything has to be earned through work expect for sunshine and air. In the United States, FQ is seen as "a happy life plan" for children as young as three. This means, a three-year-old child needs to recognize different coins and bank notes, and children as young as six are expected to understand the meaning of "my money" and encouraged to do "part-time work" after school to earn extra money.

Such education and practice make children realize from an early age that, even if one is born into a rich family, he/she has to work to make money. Chinese parents should learn from such experiences of foreign countries and combine them with their traditional customs to teach their children the value of money and how to properly use it. For example, parents should tell their children that the money they get from elders is not just a gift but also a token of their love and well wishes for them. They should teach their children how to judiciously use their gift money - maybe for their education. Perhaps parents should play the role of just supervisors and let their children plan how to use the money.

If children want to spend some of the money on consumer goods, parents can teach them the difference between expensive and cheap goods and the rules of non-wasteful consumption.

To teach their children good money management, parents should take them to open bank accounts, and deposit a major part of their gift money in the banks. This will teach the children that money generates money if deposited in a bank and can be withdrawn whenever the need arises.

More importantly, parents should donate part of their children's gift money to teach them the value and importance of charity, which is part of every person's social responsibility. And finally, FQ courses should be included in junior school syllabi to teach children the value of money from a young age.

The author is a scholar in financial quotient education.

(China Daily 02/21/2014 page9)