What I teach my sons about money

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”
Ayn Rand

I am going to tell you a truth, it is certainly better to be wealthy than poor. Your friends might tell you that wealthy people have a lot of problems. But I can reassure you having enough money in your hands gives you a sense of security and peace. Along my way teaching my sons about Mathematics, Science, and Life, I find that money should be an integral part of life lessons they need to pick up during early childhood.

True wealth is not just about money, it gives you the freedom of choice and time. It frees you from the stresses of daily life and lets you live your life more confidently.

Misconception about Money

In a society where materialistic pursuit is the only and ultimate aim, many people including parents have misconceptions about money. Looking wealthy is a fashionable trend now. We just want to be worshiped as being wealthy at all costs, therefore we take credit card debts, borrow more money just to make ourselves look good.

Friends around me take a 7-year or even a 9-year car loan so that they can own (? on loan) a bigger car ignoring the true cost of owning a car. Overseas holiday trips are paid from borrowed money and aesthetic procedures ( botox or filler injection) are paid with months of credit card installments. Life is not a competition, driving a bigger car, living in a big mansion, and have the latest gadgets do not make you a winner.

What I teach my sons about money

Money can be your master or your slave. It is truly fulfilling and easy to live your life in abundance if you learn how to master money. No one including the teacher had ever taught me about personal finance and money. I learned piecemeal advice from many people around me- my mum and grandfather, co-workers, books, investment seminars, etc. Schools aren’t good at dealing with money topics and I think it is good for my sons to pick up some lessons about money during their early childhood.

#1 Manage your own money

Money is an open topic in our household. My son might be asking me one day, “Papa, how much do you make in a day?” or ” You told me to study hard to get a good job so that next time I can retire early but you work so hard every day, why aren’t you retiring?”

I try to answer all these money-related questions and I make a point for them to keep and manage their own money ( money they get mainly from New Year HongBao and dividend from stocks they own). They are encouraged to record all expenditures. Even though their accommodation, education, food, clothes, shoes, and most toys are covered, they can use their own money to buy extra things they like.

If they keep on buying things they want, soon they realize their money is finite and run out easily.

# 2 Delayed gratification

They are always given extra 5 days to think before deciding to buy anything they want. One day, my son told me he wanted to buy a new guitar. I was elated when I knew he wanted to pick up a new skill. The decision was not made immediately and an extra 5-day cool period was given so that he could make up their minds.

He was then encouraged to learn to play first before buying the guitar. I ended up getting him a better guitar 2-3 months later. I told him If he decided to give up halfway during the guitar lessons, he had to share half the tuition fee with me.

This exercise trained him to be patient while waiting for what he wanted. And also helped him to know the importance of impulse control.

My sons learn to take responsibility for every decision they make, if they give up halfway, they lose some money from their piggy banks.

#3 Money actually can grow

And yes, money can grow not on trees but if invested in the right investment vehicles. If they keep the money under my care, I give them an interest of 10% per year. They know well their monies grow if they keep them instead of spending them.

They are taught about dividend stock investment too, if they keep good blue-chip stocks, they would be paid good dividends every year and see their monies grow slowly. I also explain to them about owning shares of great companies. When you have enough holdings of many companies, eventually, these shares give you enough money every month and you are out from the 9 to 5 rat race! You are free to choose what you want to do in life.

Of course, money is not the ultimate quest in life. They learn to master money as quickly as possible so that they move on to the next phase of life- finding the real purpose and live the life they want.

#4 It is your choice

It is your choice to be a money master or a slave. The mentality of ‘I want this!’ and ‘Others have this and I also want !’ is just a reflection of your weak mindset. My sons learn how to differentiate between ‘want’ and ‘need’, it is better to keep your extra MYR3000 and invest for long-term returns than spend that amount of money to buy an iPhone. Needs can be fulfilled but desires would never be!

A new exciting handphone now would turn to be an old slow outdated handphone 6 months down the road. There is no way you can own all the toys you want in life. Money should buy you freedom and peace, not stuff that changes model/version/appearance every few months.

#5 Start giving

“Why does my friend’s father ride a motorcycle and we have a car?” and ” Why my friend’s house is so little?” are common questions my sons asked me when they were younger. This gave me the opportunity to teach them about sharing and giving.

When you have few desires and enough money, you feel obliged to share your abundance. You get more joys out of giving joys to others.

“No one is useless in this world who lightens the burdens of another.” 

Charles Dickens

Conclusion

Raising kids to be smart is hard, teaching them about money is even harder. But money issue is always the biggest issue in life for many people when they go to adulthood. I hope by telling my sons about money early, they pick up important lessons fast.

Groucho Marx once said, “While money can’t buy happiness, it certainly lets you choose your own form of misery.”