Does Age Matters in Cultivating Good Money Habits? at MoneyTree AsiaPac

Too Young to be Exposed to Financial Literacy and Good Money Habits?

Think Again!When it comes to Financial Literacy, most people would immediately think of personal finance, financial planning or investments such as insurance, mutual funds and the stock market, just to name a few. The common mis-perception of the topic of financial literacy is that it is a topic that is reserved for adults or at least, for people who have already joined the workforce.

I find it rather interesting that we spend more than 15 years of our lives preparing ourselves for a job in the marketplace but we do not, or at least, most of us do not even spend half that amount of time preparing ourselves to be financially literate. The term Financial Freedom, which in my opinion, is an overused cliché is something that most of us are working towards. But the important question is, how many of us actually PREPARE for it? How financially literate are we to DESERVE Financial Freedom? Most of the times, when I ask people that question, the reaction I receive from them is a mixture of confusion and surprise. Confused and surprised because they never thought they’d have to PREPARE for it. They naively think it will come if they just BELIEVE in it.

Again, isn’t this interesting? You spend at least 15 years of your life preparing yourself through formal education to be able to get a job. You prepare yourself to be able to drive by attending driving lessons. You prepare yourself to be able to operate machineries by reading through the instruction manuals. In fact, you even prepare yourself to look good before you go out on a date. But why is it that most people are surprised when you tell them that they have to prepare to be financially free?

Most of us grow up thinking and believing that we would eventually be able to achieve Financial Freedom if we adopted the age old philosophy of working hard, saving our hard earned money and practicing the virtue of frugality, not knowing that we actually get poorer each day if we save our money in the bank. We naively believe that we are ready and educated enough to know what to do with our money or know how to manage our personal finances once we obtain a degree from the university.

So what happens is, most of the youngsters go out to the real world and they start making all sorts of mistakes that would cost them severely. Most youngsters who join the workforce have no idea what to do with the money they earned. They are excited about the fact that they are starting to earn their OWN money, that they would be able to spend it on the things they like, and that no one is there to control them or tell them what to do with their money. They have the full freedom of choice on how to spend their money. And sadly, this is when unfortunate things start to happen.

Since they do not have a clue how to manage their personal finances, they look around and ask their friends, who, in most cases are as lost as they are. With Credit Card salespeople offering (or rather begging to give you) credit cards at shopping malls, these youngsters start taking up credit cards and begin to abuse it. They start spending “future” money believing that they would eventually be able to pay it all back in a “just-a-matter-of-time” mentality (please don’t get me wrong, I’m not saying credit cards are bad, they’re not! In fact, credit cards are very powerful tools to use, IF you know how to use them properly). They start “investing” (or more like gambling) in the stock market, not knowing what it is and how it works. They start acquiring bad financial habits and before they even know it, they are already heavily in debt. Then they start wondering what hit them and how they got to where they are.

That’s why it is no surprise that the Singaporean credit card debt as of December 2008 stands at an excess of SGD 3.4 billion. What’s even more disturbing about these numbers is, a large number of these debts belong to credit card holders who are under the age of 30.

Creating the awareness and teaching adults about the importance of financial literacy, in my personal opinion, is not the long term solution to solving this problem. Reason being, most of the bad money habits that the adults have, are already hard wired into their minds. It takes way too long to get them to change. What if we started teaching the kids instead? What if we taught kids good money habits? What if we taught them about the importance of savings and the different investment vehicles like the stock market, mutual funds, options, and a whole range of other investments? What if we prepared them for financial freedom at the habit forming ages of 6 - 18?

Most people smirk when we tell them we teach children ages 6 – 18 about financial literacy; savings, different types of investment vehicles, the banking system, inflation, supply and demand…etc. They think their child is too young to learn financial matters. They don’t believe their children would understand a subject which adults themselves are having trouble understanding. However, we firmly believe that no child is too young to learn anything. The challenge is not whether the child would understand what we are teaching, the challenge is whether you know how to teach it to them so that they can understand it. And based on this belief, many children have benefited from the lessons that we teach.

I firmly believe the time has come for parents to wake up to this disturbing trend which would certainly affect their children in the future. The thing is, if you don’t provide them with the opportunity to acquire money habits through the right channels, they will still acquire it through their friends who are as lost as they are. The difference is, one is going to help them form good money habits, and the other, bad money habits. Which one would you wish for your children?

The MONEYTREE™ Program is a unique program designed to educate and develop financial intelligence amongst today’s young generation (from ages 6 - 18) so as to prepare them for the financial challenges they will meet in their future.