Whenever Hazlinda Omar’s children receive duit Raya, she encourages them to keep the money in their coin boxes.
“It’s wiser to save their extra pocket money than spend it on toys or junk food. Once their coin boxes are full, the money is then transferred into their savings accounts,” said the bank executive whose children are between four and nine years old.
Hazlinda opened saving accounts for her children when they were two years old. She believes that they are not too young to learn about the importance of saving.
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“Children should learn how to save from a young age. They need to understand the benefits of savings and how to spend money wisely. I taught my nine-year-old twin boys about accumulated interest, and how money will grow when it’s kept in the bank,” said Hazlinda who lives in Kuala Lumpur.
Recently, Hazlinda and her husband, recruitment executive Yusaini Yahya, 40, signed up their twin sons, Adam Harith and Adam Haikal, nine, for Amanah Saham Nasional Berhad’s (ASNB) children’s savings workshop held in Shah Alam, Selangor.
“During the workshop, my sons learnt the benefits of saving, ways to be thrifty and how to practise good financial skills. Such camps are important as they give primary students a better understanding of why they should make savings a way of life,” explained Hazlinda, who invests RM300 each month in trust funds and Tabung Haji for her children’s tertiary education.
Father-of-four Tan Chin Cha, 48, said children must learn that money doesn’t grow on trees.
“They need to understand the fundamentals of money management and being thrifty. My children’s ang pow money is deposited into their savings account. They are only allowed to spend it on essential items like books and stationery.”
Each month, the real estate agent invests RM500 in unit trust funds and savings for his children’s education.
“Besides savings in a bank, it is important to channel a portion of savings into trust funds and education funds as the returns are better. Forced savings are vital to ensure my children have sufficient funds for their college fees,” said Tan, from Subang Jaya, Selangor.
Every penny counts
Children should get involved in savings once they grasp the concept of currency denomination, basic addition and subtraction, said Hijrah Wealth Management Sdn Bhd founder and principal consultant Rohani Mohd Shahir.
“For primary school students, get them a coin box or open a savings account. Explain the benefits of saving. For teenagers and college students, encourage them to access information on money management via their smartphones,” said Rohani.
The financial planner and author of four personal money management books added that a coin box can help instil the discipline of saving among children.
“It helps them to set aside some amount everyday. It helps if the coin box has no keys. Children will have to wait till their coin box is full before the money can be deposited in savings or investment accounts.”
Rohani said that parents play a crucial role in instilling good financial habits in their children.
“Identify your children’s short term financial goals. Sharing a simple joint investment accounts, visiting investment houses or executing online transactions together are worthwhile experience to share with children.”
With the rising cost of living, it is vital for parents to save for their children’s education. Start saving for children when they are toddlers, said Amanah Saham Nasional Bhd vice president (Marketing and Sales) Siti Norilah Shamsul Bahri.
“Times are hard and it’s tougher to obtain scholarships and loans. Place your savings in funds with high returns. The secret is to leave the funds in the account for a long term to enjoy the effects of compounding interest,” she said, adding that saving RM100 each month for your child can amount to a lot in the long term. .
ASNB – a wholly-owned subsidiary company of PNB – offers 12 investment products, including Amanah Saham Bumiputera 2, Amanah Saham Didik and Amanah Saham Gemilang.
Siti Norilah explained people should remember the old proverb sikit-sikit lama-lama jadi bukit (bit by bit, things eventually grow) when it comes to savings.
“Put aside a certain portion of your salary for your children’s education, savings and retirement funds. Be disciplined to avoid being financially strapped in your golden years. No unnecessary withdrawals (for holiday trips or lavish cars) should be made from your retirement fund,” she said, adding retirement planning should start from a person’s first day at work.
To enjoy a comfortable life after retirement, save at least 10-20% of your first drawn salary each month, Siti Norilah advised.
“Not many youths think of saving for retirement. They assume they are still young and need not think about savings. It is important to budget your finances and save for a rainy day,” she said, adding financial calculators can be used to determine the compound interest on your savings.
She added many youths opt to spend their hard earned salary on flashy cars, overseas trips, expensive dining and the latest fashion trends.
“Think carefully of your finances, especially for retirement. Think how to stretch your ringgit and invest in funds with attractive returns.”
For more details, go to asnb.com.my