Parents setting the right example
All children imitate their parents.
Think about it, growing up, parents are usually the first and closest person to a child.
The things a child say and do are often imitation of their parents.
In finances, the best way to teach finance to a child is to set a good example.
Automated savings, knowing where all your money is going, planning a budget and sticking to it, investing wisely are all clear ways to set good examples for your child.
One simple but very important finance theory to teach a child, especially at their young age – the power of compound interest; how money saved now can grow exponentially.
If this is the first time you’re reading about compound interest, it merely means the interest you earn each year is added to your principal, so that the balance doesn't merely grow, it grows at an increasing rate.
For example, with an initial savings of $1,000, adding merely $1,200 per year ($100 per mth), after 20 years, the value will be $27.907.22. (Assuming a conservative rate of 1%. CIMB savings account give 1% without the need to fulfil any spending or minimum balance requirement.)
So start now, get your finances in order and set a good example for your child.
You know you can, don’t you?