This is a guest post from Rose Fausto, mother of Anton, the young boy I featured in my article 12-year-old investment whiz kid:
Thank you very much for that nice article you wrote in Money Smarts. We showed the article to Anton and he was thrilled but I guess the parents were more excited. I read all the comments and was happy to hear the nice ones, but of course, the mother hen in me was not so happy about a couple of comments calling our kids brats and my boy brash because he paraded his "total assets." Someone also said that these amounts might have just been given to the kids. Anton was more calm about the comments, saying, "That's ok lang Mommy." My initial reaction was to do an Excel file that shows the power of compounding, illustrating how modest cash gifts over the years and more importantly, the weekly savings from allowance, can give you a six-figure-saving at age 12 if you save religiously. Incidentally, the allowances of my sons are on the low end. I remember Pia saying to Anton during the interview, "Fifty pesos lang baon mo? (Your allowance is only P50? [Roughly $1])" Anton, in Grade 6, gets P250 per week; my second boy in second year high school gets P300 per week; my oldest in college gets P600 per week and all of them pay for their own cellphone load and some of their gimmick expenses. It's all a matter of attitude. Marvin, my husband, would joke that it pays to marry an Ilocana when he is asked about family expenses, savings and investments. Maybe it's true. I grew up hearing my Ilocana mom's mantra of "live within your means, and enjoy the fruits of your labor." I think the second part is just as important. I liken it to a diet. Depriving yourself too much will make it difficult to sustain. So, this is how we train our boys too. If I may, let me share with you the system that they follow: Step 1: Put their savings in their treasure chest/box with a tickler (small notebook) that records their savings. Step 2: If the amount in their boxes reaches around P1,000, they deposit it in their ATM accounts (which we call small account for easy understanding) Step 3: If the amount in their small account goes way beyond the minimum balance of P5,000, they transfer some to their big account. Big accounts, again for easy labeling, are the money market placements that give higher yields but cannot be easily withdrawn like their small accounts. Another option for their long-term investments are the stocks that they can understand. They also know that their money in stocks can sometimes lose some of its original value. (Rose is writing a book about raising her three sons and there is a part where she will discuss in full how she and Marvin train them to be financially literate.)
thanks for sharing. this surely helps.I have four kids and I also teach them how to handle their money. I think this is a very important skill for them to learn.
Good job Rose! I commend you for your efforts in instilling financial discipline to your kids this early. I hope more parents follow suit.
Thanks Tintin and Rose B. (we're namesakes). Yes, I hope what I shared can help and inspire others to raise their kids to be financially literate. Can you imagine if all our children will grow up to be money smart? Wouldn't it be wonderful?
My sincerest congratulations Maam Rose for being a financially responsible mother to Anton. おめでとうございます Omedeto gozaimas! I'm sure you read my posts below and I also credit my parents for helping me hold on to what I earned on TV right until today:
http://blogs.inquirer.net/moneysmarts/2009/01/28/12-year-old-investment-whiz-kid/comment-page-1/#comments
I've plenty to remark so here's just a few:
"Anton... was thrilled but I guess the parents were more excited" - Ay naku, sinabi nyo :D
"...was not so happy about a couple of comments calling our kids brats and my boy brash because he paraded his “total assets” - Welcome to the real world! Anton will learn the challenges of retaining wealth in a world of haves vs have-nots. I myself made it to UP and it's tricky dealing with socialist-leaning classmates and professors less well-off than me! Siguro it's just a matter of surrounding myself with the right friends and influences to keep the good habits intact. And a little humor too - I get teased here in Japan as an おぼっちゃま obocchama - rich kid brought up by rich papa. Yun ang akala nila hehehe :D
In learning to save and invest, my own fave is the Rule of 72 - easiest way for elementary students to appreciate the wonders of compound interest.
" Incidentally, the allowances of my sons are on the low end" ... But as we learn at the end of the day, it's not how much we earn. It's how much we keep. Anton might be amused to know that there are so many kids and teens there on TV make hundreds of times his allowance whose blessings are bound to be dissipated by the time they reach adulthood! (now don't get me started with details :D ) Modest allowance plus good foundation on financial literacy will forever be 'lamang' to a lotto winner with zero idea how to retain it.
"... it pays to marry an Ilocana when he is asked about family expenses, savings and investments" - we're not Ilocanos, but I'm quite amused your ethnic group dominates the Pinoy community there in Hawaii!
Take care :)
@Ma'am Rose: Mam, what age po kayo nagstart na magteach sa mga anak nyo ng financial lessons?
How did you start po?
Idol ko kayo Mam! Sana magawa ko rin yung nagawa nyo at makapagturo sa anak ko. Thats also one of the reasons why I'm always trying to learn so I can teach my daughter.
@Ma'am Rose: Rephase ko po yung tanong ko. What age anak nyo nung start nyong turuan? :)
hachiko, thanks for your comments. Sounds like you have a lot of stories you can share, particularly, how your parents were able to control your spending habits despite the fact that you were earning big bucks in your teens. If you are interested to share with me some of these stories, you may ask Salve for my email address. Thanks.
thanks, rose, for sharing. looking forward to your book.
Hi Ms Rose, Salve can give me your email.
Hmm, I'd say good savings habits are best controlled when your money's invested and you're rewarded for holding on to it. Isn't the thought of doubling your money in stocks way cooler than buying a car that loses half its worth? And the psychological rewards of tripling (quintupling?) your orig net worth in my case, talagang sulit.
Luckily then too, I was at the right age to understand how hard money comes but how quickly it goes. The slim odds of getting money on TV, and next thing you know everyone's claiming a slice of it! Lalo na yung BIR hehehe :D Nothing teaches better than actual experience, nice to know your obocchama Anton is learning the nuances of savings, deposits and stocks. Keep it up and it'll all be sulit one day :)
Sylvia, you're welcome.
Mzkukuro, they were very young when we opened their savings accounts for them, especially Anton. I think we opened his account when he was just one month old because he received cash gifts from his baptism. I think one of the best gifts we can give our kids is a savings account where we can keep their cash gifts right away.
Then it was when they were in grade 1, when they started getting their weekly allowance, that they actively participated in what I'm hoping to be their lifelong practice of saving. Every week they would set aside savings from their allowance. It's important that they see their money grow so that they get excited. When they started accumulating enough savings, we introduced other forms of investments. Of course, we had to use age-appropriate terms; hence, we coined the terms small account and big account. I hope this helps.
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It was rude on the part of those people for saying that it was the parents who just gave the money to the kids. I believe that kids who wants to save money faithfully tries to save even if it was to compromise with a toy he wants and isn't that wonderful we should learn from them to control our desires on unnecessary wants. It is better to let the kids handle their own money but we should also never make the mistake of giving more money. I also feel that the allowances from which they try to save depends on how much we're giving them.
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