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  • Save, Spend or Share Christmas Aguinaldo? Parents Share How to Involve Your Child With the Decision

    A Christmas cash gift is a great tool help kids learn money management.
    by Aneth Ng-Lim .
Save, Spend or Share Christmas Aguinaldo? Parents Share How to Involve Your Child With the Decision
PHOTO BY iStock
  • One life lesson parents need to teach their children is how to manage money. From saving to spending to sharing it, both Mom and Dad need to sit their children down and start the discussion as soon as they feel the time is right. The holiday season is the perfect opportunity when your kids receive “aguinaldo” or cash gifts from family, Ninong, Ninang, and friends. 

    “The first time my son was given a cash gift, I remember diving for it right away.  He was only 2 years old, and I was worried he would either eat it or tear it,” recalls Jo, a mother of two.  “That year, he received cash gifts from three different people, and my husband and I decided to pool it together and got our son the playpen we wanted but was hesitating to buy.”

    As her son got older, Jo noticed he was receiving more cash gifts instead of toys so she decided to open an account for him when he turned 7. “But I missed the opportunity of involving him in that decision. Looking back, I wish I took him with me to the bank and explained to him what we were going to do with his money.”

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    This Christmas, when your children receive cash gifts, you may want to consider a “game plan” on what to do with it. Here are a few suggestions.

    How to involve your child in managing his Christmas aguinaldo

    Game plan #1: Save it

    Most parents will take this safe route, which is to set aside cash gifts received and save it.  However, with safekeeping, you and your child will miss out on making a money decision together.  And since it’s technically their money, that would be a shame.

    No matter their age, try and explain to your children that so and so gave them this amount of money and tell them what it can be used for — enough for say, one meal in a restaurant, or one toy, or one pair of shoes. It would give them a better idea of the value of money especially when they are 6 years old or younger.

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    You can also consider taking them to a bank and opening an account in their name. Financial experts say age 7 is a good age to start.

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    According to Sarah Jessica Navarro, first vice president for Marketing Communications of BDO Unibank, “the ideal time is really as early or as young as you can start them. Saving is a habit best taught and reinforced from an early age. Giving a child a saving or investment product is a wonderful gift for their future.”

    BDO offers Junior Savers, an account designed for children from age 0 to 12 years old. “We believe in teaching the value of saving money from a young age. That’s why we’ve made it easy to open a Junior Savers account with just an initial deposit of Php100,” explains Navarro.

    The Php100 minimum deposit requirement makes it easy for parents to open a bank account. When the savings grow over the years, you can begin to look into getting more returns for your child’s money, including putting it in a time deposit, treasury bills, equities, mutual funds, and unit investment trust funds, among others.

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    To help your child monitor her account, a passbook comes with a BDO account. When your child reaches 7 to 12 years, she can get an ATM card, too. And should you want to help your child build her savings, you can easily transfer money through your own BDO banking account online.

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    Another leading local bank, the Bank of the Philippine Islands (BPI), hopes to attract young savers with Jumpstart. “This is designed for kids 10 to 17 years old as a tool to introduce and form the habit of saving at an early age,” says Carmina Marquez, department head of BPI Deposits Product Management.

    One of its unique features is “Guaranteed Savings,” which, according to Marquez, “allows you to hold a certain amount of your child's savings to protect it from impulsive withdrawals.” 

    Like BDO, BPI also included a convenient option for parents to transfer funds to their children’s account electronically. You can choose to make it scheduled funds transfer should you decide to pay your children’s allowance through their ATM card or just to help boost their savings regularly.

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    Game plan #2: Spend it

    We all spend money every day, so why expect your kids’ to treat their money differently? It is impractical to expect them to save 100% so why not give them a realistic game plan?

    BDO’s Navarro suggests this: “A good way to educate them is to use the 50-40-10 rule: save 50%, spend 40%, and share 10%.” So if your daughter received P2,000 in cash gifts, you can consider saving P1,000 in the bank, sharing P200 to a charity of your choice, and letting her spend P800 as she wishes.

    BPI’s Marquez recommends this: “An idea worth considering could be bringing them to an experiential center, such as KidZania, where the kids could learn how to earn and save money.”

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    At this family entertainment center, kids from 4 to age 17 work in adult jobs and earn KidZania currency.  And if they want to enjoy the attractions offered, they have to shell out their earnings — no free ride here.

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    When my daughters went to KidZania as part of their school field trip, I remember they wanted to try so many of the role-play activities but were dismayed to find out that they have to “pay” with KidZania money. But they learned to prioritize and choose the ones they really wanted because their “money” will not be enough. And because their initial ‘cash’ ran out quickly, they also had to “work” to earn money.  There’s nothing like having to pay for something and parting with hard-earned “cash” for children to start to see the real value of money.

    My then 10-year old said: “My money disappeared so fast, and it’s so hard to work.”

    I remember laughing about it but later when we went home, I explained to her that real life is no different. And in many cases, it is harder because even when you want to work, it does not always mean someone will hire you. Plus, there is no guarantee you will be paid the salary you think you deserve.

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    So where else can you start spending money together? How about at the grocery? Take your children with you and with their “budget” tell them they can shop for what they want. As you walk up and down the aisles, take the chance to discuss how food costs money and the importance of family budgets.

    Even while on vacation, your child can learn how much having fun costs.  Show them options for airfare, choices of hotels and which rooms plus sightseeing packages. You will be surprised how much your child will remember later from your early — and repeated — money conversations.

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    Game plan #3: Share it

    When parents discuss money with their children, it’s usually around saving and spending — the fact that they don’t do enough of the former and too much of the latter. But this last S is just as important — sharing his or her blessings and their worldview of money will be transformed.  

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    Sam, a father of two, keeps three money jars at home. One is labeled Savings, one is marked Spending, and a third is stamped with the word Charity. “We all try to contribute to the jars with coins or bills, and we agreed that we will empty them at the end of the year.

    “I noticed that my teenage daughters like to put money in the Spending jar because they assume this is going to be money they can spend. They expected my wife and me to handle the two other jars, so we explained to them money is not just for buying things but also for helping people.”

    To bring this lesson home, Sam brought his children to a holiday party hosted by Childhope Philippines for street children. Interacting with these kids, Sam’s daughters realized that not everyone can look forward to a festive Christmas and New Year. With no homes, these kids will spend those blessed days on the streets with their families begging for alms.

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    One thing that stayed with Sam’s daughters was how nearly all the kids did not finish their packed lunch from a popular fast food chain. Later, they were told by officers and volunteers of Childhope Philippines that even though these kids were hungry, they wanted to save some of the food to take home and share with their family.

    “After that, we noticed our girls now attempt for the Spending and Charity jars to have at least the same level of money. They feel ashamed when the Spending jar has more so they’ll put in the Charity jar so it can keep up. It’s a positive step in the right direction, which we hope they will take all the way to adulthood,” prays Sam.

    Aneth Ng-Lim began her career as a writer and happily returns to her journalism roots after working as a communications specialist in the government and the private sectors. While working for a bank as a consumer education head, she honed personal finance skills and increased her money smarts. A woman empowerment champion, she is a proud mom to two teenage daughters.

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