Compared to other Asian countries—say, Singapore—the Philippines lags in financial literacy. According to Bangko Sentral ng Pilipinas (BSP), fewer than 25 percent of Filipino adults have bank accounts.
Further, while nearly 50 percent of those surveyed have savings, the vast majority prefer to keep them at home instead of financial institutions like banks, where they can likely earn interest. Most of all, over 30 percent cannot satisfy their financial needs, so some find themselves taking out loans.
The lack of excellent financial knowledge can lead to financial insecurity. On days when money is tight is critical, like in a pandemic, many Filipinos will have little to none to tide them over.
There’s no better time to learn how to build, handle, and grow money than today. Parents can start it with their children.
Here are four practical tips for introducing and improving a child’s concept about finances:
1. Open a Bank Account
One of the easiest ways to expose kids to finances is by opening a bank account. With this one, they can learn the principles of saving and investing. They can watch their money grow little by little and with minimal risks of losses.
Kids can also understand the benefits of a time deposit. If they can be patient, they can earn more since this investment strategy provides a higher interest income than regular savings. Moreover, they can have funds for bigger goals, like a vacation or school.
Many of the country’s biggest banks have child-friendly savings account programs. These include BDO Junior Savers, Security Bank’s Junior One Account, BPI Jumpstart, and PS Bank’s Kiddie and Teen Savers.
2. Encourage Them to Make a Budget
A background in finance, a college education, or even a steady income isn’t a guarantee that a Filipino is excellent in managing their money. In a study by Robocash Group, an online financing service covering respondents from Vietnam, the Philippines, and India, over 60 percent experienced a budget gap.
Around 20 percent found themselves facing the same problem repeatedly, while almost 90 percent of those surveyed said this stemmed from poor financial literacy. Therefore, teaching kids how to budget is one of the foundations of a more effective financial education.
To do this, parents can consider giving children a budget (e.g., allowance) each week. Moms and dads can then help them break down their expenses to see if the money is enough. If not, kids may need to adjust their budget and learn to live within their means.
This is also a great time to introduce savings on the budget. This way, every time they receive funds, they learn to keep some for the rainy day.
3. Consider Online Schooling
How can an online elementary education teach kids about finances? There a couple of ways.
First, online schooling can teach children some of the basic but essential traits that can also help manage money. On top of the list is discipline. Kids need to attend school promptly and submit assignments and other coursework despite the lack of physical supervision by a teacher.
Second, it helps build their resilience. Once they’re adults, they will encounter financial challenges, but this characteristic will help them get through.
Moreover, to improve financial literacy, lawmakers and even the BSP are launching programs and a bill to introduce this topic into mainstream education. If this will push through, children will learn about money management early, even if they’re under an online curriculum.
4. Let Them Earn Money
Sometimes children may find it difficult to understand how to handle money because they learn it in bits and pieces. In these cases, parents may want to introduce the whole process beginning with how to earn it.
Children can generate income in many ways. One, they may participate in the family business and earn an allowance for helping. Many Filipino parents today also reward their kids with coins every time they complete household chores.
Moms and dads may allow older ones to run a business, ranging from a barbecue stand to pet sitting and an online shop at Shopee. In fact, this strategy will teach kids many vital concepts of business. These include processing business permits, choosing products, and marketing.
Teaching kids about financial literacy may not be easy, so parents have to be patient. In return, though, these kids will grow up better financially prepared, more capable of being independent, and less likely to be buried in debt or depending on adults for their needs.