bank account – Retire Comfy

What are money values are you teaching your kids?

One good way to engage your kids in such unusual times now, is to educate them about personal finance. If you need to do so with your kids, this is the article for you, with tips grouped according to different ages.

4-6 years old: Introduce them to the concept of money and how money is utilised

Visual illustration – show them the various forms of money such as notes and coins.

Explain to them how they must pay to get the things they need/want.

7-10 years old: Educate them about earning and saving money in primary school

Teach them how earning money works.

Paying them when they complete a housework – they will learn that they have to work for money.

Or prepare a chart with the chores and the corresponding amounts they earn from doing the various chores.

This is the phase where they can understand the value of money and cultivate the skills to plan forward.

How to teach savings – encourage them to set aside some money until they have enough to get what they want, instead of spending it all at once.

11-14 years old: Open their bank account

Since they have acquired sufficient funds and knowledge on savings, it is time to set up an account for them.

Open an account with no penalties for low balances.

After opening the account:

Teach them how to check balances with the use of banking apps.
How to use these apps for payments and fund transfers.
Warn them on the risks of overspending which will lead to overdraft fees.
How their money will multiply with interest.

15-18 years old: Budgeting and loaning in high school

Prepare them for the real world.

Teach them how to do budgeting by:

Predicting and computing how much they will earn.
Find out what their usual monthly expenses comprise, such as food, entertainment etc. (this can be done by analysing their bank statements).
Saving part of what they earn.

Teach them about borrowing money:

How interest will be charged when they borrow money.
Credit scores & how credit scores can affect their credibility and hence the amount of interest they are subjected to.
Warn them on the risks of carrying balance on a credit card – a possible way is to let them be the authorised user of your card so that they have a sense of its function.

Child in tertiary education

Ensure that they have already drafted out their budget and they have the capacity to pay off expenditures, whereby at most 50% of their budget will be set aside for expenses.

Ensure that they have an emergency fund – 3 to 6 months of expenses may not be saved yet, but they should have kept $500 to $1000 minimally for unforeseeable circumstances that require the extra money.

Child graduated and fresh in the workforce

Advise them of the following:

Get a credit card of their own to strengthen their credibility.

Save for their retirement early – starting early can speed up the growth of their retirement funds.

Get insurance coverage to protect their income as well as pay for unforeseen medical bills.

last will

Estate planning is a commonly misunderstood aspect of financial planning, with people asking me “Is it the planning of real estate?”. When done right, what estate planning really means is when we are no longer around to express our love to the people dearest to us, a legacy of love is left behind for them in the form of our wealth.

Put simply, estate planning involves preparing for the distribution of one’s wealth in the event of death. It helps ensure that you can give away:

whatever you have
to whoever you want
however you like
in an orderly way;

and keeps you and your loved ones away from unnecessary court costs and professional fees.

Here are the critical estate documents anyone should create:

1. Will

What can go wrong if you don’t have a Will? You may leave behind assets which beneficiaries may quarrel over or an undesirable person may be the lawful beneficiary. Assets can also be distributed using half the time taken if it was according to the Intestate Succession Act (on average 6 months vs a year).

If you own joint assets (e.g. real estate, bank account), a Will caters for situations if both joint tenants or accountholders pass away at the same time.

For married couples, a guardian can be appointed in a Will, to care for the child if both parents were to pass on at the same time.

2. Nomination for CPF accounts and life insurance policies

Nomination forms can be obtained from CPF Board and your life insurance company. You will be able to name your intended beneficiaries and the amount of share each of them gets.

Asset distribution is also the fastest using this document, just that it only applies to CPF accounts and life insurance policies. Probate costs associated with Wills, which could be upwards of $1K, can also be avoided.

3. Lasting power of attorney (LPA)

This is not an estate planning tool per se. But this is definitely one legal document everyone should have to protect themselves and their assets if one becomes mentally incapacitated.

With an LPA, you are able to decide your future right now so that if you lose your ability to communicate, your appointed loved ones can help manage your legal and financial affairs in your best interests.

We all know that we don’t live forever. But with careful and responsible planning, we can protect and provide for our loved ones even when we are gone.

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How to Teach Your Kids about Money