Financial Planning, Sooner or Later

Source: Indonesia Expat Magazine, Issue 122, August 2014, page 25 This is an article regarding the importance of financial planning lessons from the early age of childhood. At the beginning, the writer criticizes the action of parents and schools who are neglecting to teach money and personal finance lessons to their children. As a consequence, the kids, as they grow up to be consumers, do not understand anything about saving and spending. The writer then gives five tips to get kids to understand this issue. Firstly, the kids must be taught to save money to buy things they want. Stressing the importance of waiting for a favorite meal or toy can teach them how patience can be rewarded. Secondly, parents should take their children to shopping around in the market in order to compare prices. This will help them to choose essential products and services more carefully. Next, the children must be involved in decisions and choices of how a limited budget is spent. In this way, they learn whether certain products are necessities or luxuries. Moreover, as kids get older, they have to know what the negative impacts of credit cards are and which they should avoid to use it. For instance, parents can illustrate how compounding high interest can keep people trapped in debt. Finally, young adults must understand about the concept of tax. Since tax is inevitable and sometimes annoying, showing your kids the positive aspects of tax as public money can ease their disappointment. In my opinion, the writer brilliantly provides awareness for parents that their children should have the knowledge about financial management skills as soon as possible to prepare them for the real world. We definitely know that children in this modern day are different from children in previous times in terms of their needs. In former times, children didn’t have much desire for toys since traditional childhood games were still dominant as their main leisure activities, so parents did not need to spend as much money for children apart from their education costs. However, consumerism and the need of gadgets are two mainstream habits of children today. Parents have to expend extra money for their various children’s needs. Therefore, it has become the task of parents, schools, and even society, to teach our young generation how to save, invest, and spend money in an effective and efficient way. LFN