Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Archive for September, 2007

How do we instill the importance of personal finance management to our children?

Friday, September 21st, 2007

The Simple Dollar (www.thesimpledollar.com), one of my favorite personal finance blogs, had a post on Educating children on fiscal responsibility. 

Please see :-http://www.thesimpledollar.com/2006/10/31/educating-children-on-fiscal-responsibility/ 

The Simple Dollar listed the three main factors that he had crystallized from his research on this subject, namely :

a) Showing our children how we  spend money. Showing them prices when taking them shopping, talking to them about what things cost,

b) Allow them to manage a small amount of money themselves. Maybe an allowance or some other form, but it must have clear limits and they should manage it themselves. Talk to them about how to manage it: should they buy a toy now, or save for something else?

c) Involve them in the finances of the house. Show them what you spend each month and demonstrate that you save each month. Tell them when there are financial problems and when there are windfalls.

The Simple Dollar wants to start off his son with an allowance and take it from there.

Will managing an allowance help instill an importance of personal finance management in our children?

It most certainly would.

The prime cause of being financially challenged is “uncontrolled spending.” Learning to spend within our means (i.e. spending within the allowance), will form a rock solid foundation for healthy personal finances.

I have earlier posted my thoughts on the two most important personal financial management lessons that I have learnt and want to impart to my children.

Whilst for the two elder children, I proposed that a peer group is more important now, for the younger children an allowance and its management would be the best start.

I’ll write more on this after my wife and I implement this scheme.

 

When should we start our children on having written goals?

Thursday, September 20th, 2007

I am sure that we have all heard about the often quoted study of 1979 Harvard MBA grads which showed that the 3% who had written goals, plans and read them daily earned 10 times more income than the other 97% - 10 years later.  

Having written goals gives motivation levels far higher than just having some ideas in our minds. 

Can we get our kids to have written goals? 

Yes, we can and we should.  

In December 2005, we started this “exercise” of getting the children to write some objectives to achieve during the next year.  My younger three children, i.e. our son, Abang (“Ahbang”), Nana and Ain were then 11, 10 and 6 years old respectively. They accepted the exercise willingly, and wrote some goals in their “goal book” to shoot for. 

 We now do this exercise every year, and I sort of review their goals with them individually, every school holidays (about 3 times a year).  It has now become a yearly ritual.  Though there are now some groans and moans when this exercise is mentioned, we get this done.  

I am very happy with their cooperation and hope that we shall keep this up every year, until this becomes an ingrained habit in my children.  

My suggestion is to start this practice early. Don’t be too bothered when it is clear that none of the goals are being achieved. This happens even, to the best of us. Eventually you will see some achievements being clocked.  

The key is for them to have something simple written up that they can identify with. Review these goals periodically with the children. Try not to be too judgmental or aim for too lofty a goal. “Washing my own shoes” is a great goal for a 6 year old.  

What is your experience? Please share it with us.   

What “branding” should we aim for as an employee?

Wednesday, September 19th, 2007

Aja, my second daughter asked me an interesting question the other day. She asked me about what should be the quality she should get herself known or the brand that she should become in her career. 

This was a tough one. Employers do not “brand” employees, or do they? But thinking back, I have formed opinions about certain colleagues who have worked with me. This guy is like this, that girl is like that…etc. Perhaps a “branding” does form and perhaps it sticks. 

A story, told me by one of my best friends, Jeya, came to mind.  Jeya told me that he was once asked by another friend, for names of people who would be suitable for the position of Finance Director of this friend’s construction company.  

A few names were put forward. Then the other friend asked for the  most honest person of this group? And a name of one person came up immediately! Well, this guy clearly had the brand of “honest and capable.”  

And I told my daughter, “get yourself known as being dependable and a person of integrity”.  

All other qualities looked for by employers are learnable….technical skills, soft skills etc.  But our reputation for integrity…..it takes quite a while to build. 

As Warren Buffet said, “In looking for people to hire, look for three qualities: integrity, intelligence and energy. And if they don’t have the first, the other two will kill you.” Get Rich Slowlya personal finance blog that I follow has a good story on this branding. It features Michael Hyatt, President and Chief Executive Officer of Thomas Nelson Publishers, the largest Christian publishing company in the world and the sixth largest trade book publishing company in the U.S. Michael lists “his responsiveness” as his branding or the secret to his success. Read the full story at : http://www.getrichslowly.org/blog/2006/05/24/the-secret-of-my-success/

Do you know of any person who has made an strong impression with his or her particular “brand”? Tell us your story. 

5 Things that should be taught in schools - Part 6

Tuesday, September 18th, 2007

Time Management 

Most parents would be able to relate with our children, having lazed around the house all weekend, suddenly taking out their books and doing their homework at the eleventh hour. And this would be usually just before their bedtime. We just sigh and say…”kids!!!!” 

Procrastination and / or a lack of time management is now almost deemed an integral part of children’s lives. And many children carry this trait on to their adult lives, with very negative consequences.  

Does this have to be?

Children are exposed to some sort of time management in schools. They have school timetables. They have specific times for specific subjects. In addition, they have extra curricular activities on specific days of the week.  

The most elementary level of time management would be the preparing of lists of things that have to be done. And ticking them off as they get done.

Why can’t this exercise be taught to children in schools? Until this practice becomes ingrained in them, much like reading and writing.This habit of preparing lists can slowly be brought to a higher level such as prioritizing, planning for longer periods etc.

My wife and I have started on showing our children the usefulness of checklists in general. With the younger children, we do not prepare task lists, but for example, lists of things to take along when we travel. The children seem to find this fun, and of use to them. Even my youngest girl, Ain, (8 years), digs into this exercise with gusto.

The two elder children and I use an Excel worksheet of a template for the year, divided into weeks and days. (Copied and adapted from Steven Covey’s book, The 7 Habits of Highly Effective People).

Here, we update important dates and events. The week can be planned in advance and appointments etc., plugged in. We have found this to be very useful.

Please email me for a copy of this template.     

5 Things that should be taught in schools - Part 5

Monday, September 17th, 2007

Sales Skills   

We must all know people who can “talk birds down from trees” and also others who “can’t talk their way out of a paper bag.” 

These are “persuasion skills”, “convincing skills” or “sales skills” at work.   

We “sell” almost daily. A teenager may have to sell or convince his parents to allow him to go to a concert. A shopkeeper sells to his customers and so on.  

Some of us are blessed with good sales instincts. The rest of us just envy these guys and girls. Luckily some of this “rest of us”, realize one day that these skills can be learnt, though it may be, unfortunately, some time later in life.  

Why should this be so? 

Sales skills are so often used in life and it would be really useful to be taught them early in life.  

And school would be the best place and time to have been taught these sales skills, and its corollary of handling rejections. 

As children grow up, they pick up some sales skills along the way. They learn what would be the best way to convince Mama, Papa or the neighbor down the road. The “school of hard knocks” helps them along the way as they learn from experience on what works best and what does not.

My wife and I believe that our children have over the years picked up some basic sales skills. We do not have any plans for them to be sent for any formal sales courses.

However, we have taken them along to some of the MLM Opportunity Meetings we have attended, where part of the presentation is on sales skills and how to sell the products they promote.

As parents, what do you think we should do to give our children a grounding on sales skills? And when should we start? Or should we just let them learn by experience? 

5 Things that should be taught in schools - Part 4

Friday, September 14th, 2007

Social Skills  

We, humans, are social beings, so having good social skills should be a given. A lack of these skills can contribute to us feeling isolated and lonely, whilst having great social skills helps us meet interesting people and progression in our careers and relationships, amongst lots of other benefits.  

Children lacking in these social skills withdraw into themselves. My “psychologist to be” daughter pointed out to me, that some of these children, being unable to express themselves, or handle the stress that they go through, keep their feelings bottled up and carry this discomfort into their adult lives. 

(My daughter has a fascination for child psychology and is majoring in this field.)

People with great social skills are called “sparkling”, “nice” and  “civilized” whilst the opposites are called “dull” to say the least. Social skills are not otherwise known as “people skills” for nothing. 

There are a number of skills that fall within this classification of social  skills. Skills, such as those below listed by :- 

http://home.att.net/~clnetwork/socialsk.htm
 

Taking turns, Praising, Sharing, Asking for help, Using quiet voices, Participating equally, Staying on task, Saying kind things, Using names, Encouraging others, Patience, Communicating clearly, Accepting differences, Resolving conflicts, Following directions, Staying with the team, Sharing ideas, Sharing tasks, Celebrating successes, Helping others….etc.

Though our children are exposed to these skills in school, they are not really taught these skills formally. Most of them pick up these skills, over the years as they grow up. 

I believe that schools would do a great job at teaching these skills. And as parents, we too, have a duty to educate our children in these social skills at home.

This we do. Some by example, some by discussing and yet others by “blush”, yelling.

5 Things that should be taught in schools - Part 3

Thursday, September 13th, 2007

Communicating Effectively

Effective communication can be defined as communication that is well understood by the sender and the intended recipient. So the message is always clear and the expectations of both sender and intended recipient are met.

We communicate daily, either by writing, verbally, visually etc.

Imagine the immense benefits if everybody could communicate effectively.

Almost all schools have debating clubs.

How about starting clubs on communications? Where the children can learn communications in a social and relaxed atmosphere. And equally importantly be amongst their peer groups, whilst they learn.  

Toastmasters International, (www.toastmasters.org),(TI), is a club dedicated to helping people become more competent and comfortable in front of an audience, and offers a proven, structured and enjoyable way to practice and hone communication and leadership skills.

Though TI has a minimum age requirement of 18, most of its members are much older. (On the other hand, Rotary International (RI) has Interact and Rotaract Clubs for the 14 – 18 year olds in schools and 18 – 30 years old in colleges respectively.)

TI would do the world a great service by starting TI Clubs at colleges. Perhaps they could impose a requirement on their senior TI members to start TI clubs at every college in their community.

At the invitation of a friend, I attended a TI meeting with my two elder daughters. They enjoyed the meeting, though almost all the rest of us at the meeting were old enough to be their parents.

I suspect that I may not be able to convince my daughters to join TI now so I do not intend to try. Perhaps we shall attend a few more meetings together, just for the fun and social gathering atmosphere the meetings provide.

At least, they now know that there is an easily affordable avenue, where they can improve their communication skills in a well structured and fun environment. .   

5 Things that should be taught in schools - Part 2

Wednesday, September 12th, 2007

Personal Finance

We all have our regrets, some secret, some openly expressed. Coming in at the top of the heap of the latter would be personal financial matters that we wish we had done much earlier in our lives.

- Would it not have been great had we bought XYZ shares when they were only 20% of what they are being quoted for now?

- If only I had purchased the property in XYZ location in 1997, when the owner was almost giving it away?

- If only, if only…..

Of course, many of these regrets are with the benefit of hindsight plus the knowledge that we have gathered over the years on personal finance and its management.

If personal finance and its management had been taught in schools, we would have at least had some ideas on :-

a)    Credit Cards and the double edged swords that they actually are,

b)    Budgets,

c)     Investing and an understanding of the associated risks and rewards,

d)    Savings and the tremendous power of compounding,

e)    Market Cycles,

f)      Asset classes,

g)    Etc…etc…..  

as we started on our working lives.And be able to plot our own approaches to taking advantage of the many opportunities that would have come our way. For sure, we should be better off today.

www. PracticalMoneySkills.com is a website designed to help educators, parents and students practice better money management for life. It is a partnership between VISA and leading consumer advocates, educators, and financial institutions to launch a program to improve the nation’s (USA) financial skills.

(It quotes a VISA survey that 77% of parents rank personal money management as only below that of writing, as requisites for their children.) 

This resource rich website offers online tools and free classroom material that educators can use to teach personal finance. It offers teachers’ guides, student worksheets and quizzes that can be played by students.It covers lessons for young toddlers from preschool stage to college going young people aged 18 and more.

Now if only our policy makers and educators would listen to the silent pleas of parents, and include this so important skill as part of the school curriculum.

As for me, I have asked my elder children (who should be graduating next year) to form peer groups that would have personal finance as a core issue in their “hang out “ agenda.

You know…the “birds of a feather” principle. I am sure, that this peer group, if correctly “switched on” will do far more that any amount of parental advise.  I am still figuring out what else I can do to actively promote this, without irritating my daughters.

I seek your ideas and opinions.

5 Things that should be taught in schools - Part 1

Tuesday, September 11th, 2007

I came across this very interesting article in :-

http://briankim.net/blog/2007/03/top-5-things-that-should-be-taught-in-every-school/

This well written article listed the following 5 issues that should be a must in every school. 

1. Personal Finance

2. Communicating Effectively

3. Social Skills

4. Sales Skills

5: Time Management

I agree wholeheartedly. Basic grounding in the above skills, would work wonders in making our young so much more rounded. These skills would certainly give them a head start in life. And what better place to start then in schools.

The whole concept of “school” should be to impart education and knowledge that should be of use in life.

I am no expert in education. However I can say with conviction that, I have never found any use for some of the things I had to learn such as differential equations, quadratic equations and convex and concave lenses….. hah!  I am also sure that I shall not have any use for these in future.

I would have loved to have been taught the above 5 skills in school, in a structured form. This would have made a real difference in my life.    

Instead as many others, I had to pick up these skills piecemeal as part of my life’s journey. In fact, I would dare say that a large number of us do not even realize that these skills can be learnt and are available to be learnt. Instead we just go about envying those guys who either have these skills by natural instinct or who have been lucky enough to have been taught them.   

It seems that many schools are now including some parts of these “LIFE SKILLS” and even more in their curriculum. Hooray for them! Better to be late than never.

What about those of our children who never went to such farsighted schools? What can we do for to help our children in such a situation? The school environment is accepted by our children as “a place where they are taught and the children are expected to learn.” Their minds are, in my view, a lot more receptive to learning in such an environment. It is not quite the same, when they are out of school and the “learning” has to be voluntary.

As parents, we have to find a way for our young to be educated in these vital life skills and in a way that would “switch” them on.

Let us explore these skills one by one and also look at how we, as parents, can assist in instilling these skills, or at least some basics of these skills in our children.

How do we impart to our children the two most important Personal Financial Management Lessons that we have learnt?

Monday, September 10th, 2007

Previously we have spoken about the “THE TWO MOST IMPORTANT PERSONAL FINANCIAL MANAGEMENT LESSONS THAT WE  HAVE LEARNT AND WANT TO IMPART TO OUR CHILDREN.”  

For me, these lessons were :-

 a)      Pay ourselves first, or automated savings or living below our means,  and b)      Forming a peer group on improving personal finances.  

Now the difficult part, how do we impart these lessons to our children? And how do we try to ensure that they implement them? Where should we start?

The art of communicating with our children is a topic that can fill many volumes. There are countless references if you Google “communicating with children”. I am no expert and somehow I don’t think just talking to my children about personal financial management would do the trick.

My two senior girls are now in their final year of undergraduate studies, and should be graduating in 2008. The eldest, Along (“Ahlong”) is doing Psychology, whilst Aja, the younger girl is doing Accounting and Finance. (I did Accounting, too, and I assure you that a degree in this field does not automatically mean that you have a head start in managing your personal finances).

I don’t think asking them to read books would be of much help either. The present generation appears to get most of their guidance and communications from the Net or from their mobile phones.

The discipline to study and to implement personal financial management steps require serious, continuous commitment and follow up. Something, a peer group with personal financial management (pfm) as an issue of concern could create and keep going.  So this is what I should focus on first. I discussed with my daughters the issue of them suggesting to their group of closest friends, that pfm should be “an integral part” of their hangout agenda. 

Surprisingly, they have agreed and promised me that by the end of this year, 2007, they would have this group up and running. I have no idea how they would do this. I want to do something to ensure that this becomes a reality, but not sure what or how…yet.

I welcome any suggestions, comments or ideas.

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