Growing up, my “Money Memory” (as Suze Orman calls it) was one that had to be earned, saved and budgeted all on my own. In my earlier years, my mom would credit a monthly allowance into my bank account. She told me that’s all I would get for the month and so I had to budget it accordingly. That included my recess and lunch money, and other things I wanted to spend on (outside of gas or school necessities like textbooks or school shoes). If I went out with friends to a movie, I had to use that money. If I wanted to buy little trinkets or a new cassette tape (I just dated myself right there!), I had to use part of that fund. And if I used the credit card extension on things other than its intended purpose, I had to pay it back (with the money I saved). This scheme kept me quite disciplined, and it taught me to plan ahead and budget. It also forced me to choose and prioritize what I would spend on and when.
My family also taught me to work hard to earn more. When I’d get good grades, I’d present my report card to my grandparents and they would give me rewards tantamount to the level of honors I presented. The higher the grade, the higher the amount I’d get. During the summer my grandfather would take me with him to his office and I would earn coins for shredding paper or fixing something behind the desk, or punching in a sale.
Incidentally, a #SoMoms gathering isn’t complete without great food, and New World never disappoints! At the ground floor to the right of the lobby is a function room with its own kitchen. All our food was prepared there. The best part about it was we didn’t even notice. The chefs were very discreet, and there was absolutely no smell of food sticking to our clothes. Sublime!
But I digress. Back to Rose and Raising our Financial Quotient.
It is true though – my money memory affects my parenting. I recently said to Sam, if she wanted the macaroons across the street, she had to save the coins she would get and use them to buy it. As it turned out, after a few quick lessons in addition, subtraction and (yes), multiplication, my almost five-year old scraped together enough to get 6 macroons of her choice. I didn’t realize I had just give my own daughter her first Money Memory right there. And yet – it was more on spending. What about the saving part of it all?
Rose was the key speaker in a Financial talk sponsored by AXA for the #SoMoms, a session we had to help better our own Financial Quotient. A mother of three boys, Rose was an investment banker before she decided to become a full-time homemaker, and she is currently a columnist at PhilStar.com. I’m so glad she took the time to talk to us and shed some insights on raising our kids’ financial quotients (as early as birth she says!). After the “spend-on-macaroons” incident, I was sure we (my family) needed it.
Strangely enough, matters concerning money aren’t new to me. My mom was into investments for as long as I could remember. My dad worked in the Stock Market, although admittedly I could never understand it. I took finance courses in college and passed. And I married someone who was a banker for most of our pre-wedding years. But for some reason, it never struck me to see it the way Rose did and that made everything I knew take on a different (yet more relevant) light.
Rose first suggested that as a family we sit down with our spouses and our kids and talk about our core values. From there we were to reflect the way we used and handled money so that it would support this. That totally makes sense because it’s really how you want to live and carry out your life (and yet, no Finance professor I’ve listened to has ever mentioned it). Why do it any other way? It’s something that was never done in my family before – or it was, but I wasn’t involved until much later.
Corollary to that and contrary to cultural practices, she advised that we involve our kids in family money discussions. Making them aware of the money, the assets and the decision-making will help build their financial quotient and teach them good saving habits early on. Rose talked about how they do it in their family, when the kids know how much goes into their savings, and they have a say as to which stocks to buy and sell. It’s daunting to think that your child will have reasonable “control” over his or her money at an early age, but it’s also impressive. As parents, we can learn so much through this process (It assumes of course that you’ve first put good solid responsible heads on their shoulders!).
Rose also presents each of her kids their own Balance Sheets and Financial Statements so that they see their net worth on a monthly basis. That’s pretty amazing.
The other concept that struck me was when Rose said we should pay ourselves first. Instead of using the the formula “Income – Expenses = Savings”, she said to start doing “Income – Savings = Expenses”. How that would work was a basic question we all asked, as we know, when it comes to raising children, we never run out of expenses. Rose simply stated it’s all about mindset and attitude. “If you pay yourself first, you will find a way to make it work out in the end.” Another good habit to teach our kids now!
Savings includes teaching them to plan for the future, something that easily put off because we tend to get so caught up in living out the present (read: accumulating expenses). And these can be done through different financial instruments as well – from stocks, insurance, bonds to a retirement fund. It’s not just about setting aside, but also investing in growth. It depends whichever ones you are comfortable with and whichever ones (you feel) are aligned with your family’s core values and the goals you set for your future.
Thank you AXA for sponsoring such an enlightening talk, and helping the #SoMoms on our course to becoming #BetterMe’s.
Incidentally, AXA is running a raffle promo on their Facebook Page, from now until August 30. You could win a variety of prizes, from an Annual Gymboree Membership, some National Bookstore GCs, and Yamaha Music Lessons just to name a few. The Grand prize is a trip for 4 to Legoland Malaysia! Just click on the link and follow the easy steps to submit your entries.
Follow AXA on Twitter at @FailProofPH.