DO you know how much duit raya your children have collected in the past few days? Do you keep track of how they are spending it?
For children, duit raya is part of Aidilfitri. Even the very little ones get excited over the colourful little envelopes. Older children will already have made a shopping list.
Some cry and throw tantrums if they don’t get any duit raya. Some visit open houses for the money, not the food.
Parents should take this opportunity to teach children about money, manners and gratitude. Ask them to show good manners when visiting people’s homes. Kids need to be reminded regularly. It’s also a good idea to run a mock exercise at home. Good manners begin at home. It reflects our ability as parents.
CASH MANAGEMENT
If children are aged 6 and below, parents should keep their money for them. Separate the cash of one sibling from another. Expect them to ask about the total collection a few times a day. Smile and patiently assure them that their money is in safe hands.
Never spend that money without their approval. It’s a lesson about trust and promises.
Older children can keep the money themselves. Ensure that they do so in a safe place like their wallets or purse. Tell them that its safety is their responsibility. If it’s lost or misplaced, they can’t blame others.
This is a powerful lesson in responsibility.
Our role is to supervise children. Regularly ask them how much money they have collected. Don’t let them keep the money too long in envelopes which may be thrown away by mistake. Help them recycle the envelopes.
This is a perfect opportunity to teach children about savings and managing a windfall. There are many temptations. The neighbourhood grocery stores offer attractive things like toys or fireworks especially during this season. Some even sell mini-gambling games. With money in their hands, kids are tempted.
Help them to resist. Start with an agreement that they should keep most of their duit raya.
SAVINGS FORMULA
I recommend the Reverse Savings Rate formula. If during normal times you encourage them to save 25 per cent of their allowance, this is a time to reverse it. Save 75 per cent and spend 25 per cent. If the collection is RM200, 25 per cent is RM50, a big sum for most children.
Let’s take it further. The 75 per cent should be deposited into your child’s bank account and added to their regular savings, if any. Ideally, you should bring them to the bank where they can do the necessary while you supervise. This exposes them to the process of banking and savings.
We should allow children to spend 25 per cent to avoid envy upon seeing their friends spend their duit raya. Otherwise, they may view the exercise of saving money in a negative way — that it’s too strict and controlling.
Give them joy by fulfilling their dreams. That is their right as children. However, buy things for them based on affordability and needs.
Teenagers can be given a bigger say in how they spend the money. However, parents, still have a role to play. Talk and discuss positively. Encourage them to apply the same 75:25 rule. If you can afford it, match their savings ringgit for ringgit — a great way to encourage them to save rather than spend. Ask what’s their spending plan, including what and where to buy. Offer advice and experiences such as cheaper stores and brands.
NEVER TOO EARLY
It’s never too early to start teaching children about money. It’s one of the most responsible things to do, since money management is not taught in schools. Teach them to save as early as possible. Children in primary schools should be given weekly, not daily allowances. Older ones in secondary schools can be given monthly allowances.
Give them 25 per cent more, but that amount should be saved first before they spend. Saving first before spending is a powerful concept.
If we practise the savings first concept, it will become a habit when the children earn their own money.
Read more: SMART PARENTING: Managing duit raya - Sunday Life & Times - New Straits Times http://www.nst.com.my/life-times/sunday-life-times/smart-parenting-managing-duit-raya-1.335464#ixzz2bcEuLcTf
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