Covid-19 exposes the paramount importance of savings
With the economy coming to a standstill due to the Covid-19 pandemic, there is a brewing concern about jobs and salaries. Some bank analysts predicted that 100,000 layoffs may happen in Singapore by the end of 2020. As the saying goes, “All days are not the same. Save for a rainy day. When you do not work, savings will work for you.”
In Singapore, there is a growing trend of millennials getting themselves into debt. A genuine concern is that many of them are beginning to live from paycheck to paycheck. But hey, isn’t our education system considered one of the best in the world, where we pride ourselves to be among the top nations that constantly score well in International Mathematics? How is it that our youth are so poor in counting numerical figures?
Yes, we parents are so engrossed in our children’s Mathematics scores, but are we paying enough attention to their financial literacy? So, what exactly is financial literacy? According to Investopedia, financial literacy is defined as “the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing”. It helps individuals to learn to be self-sufficient so they may eventually reach financial stability.
Below are four key takeaway concepts that we can impart to our next generation on financial management. The earlier our children are exposed to these concepts, the stronger their foundations will be on adopting the correct mindset.
Spending: While everyone needs to spend, our children need to be fully aware about the consequences of overspending, the strict discipline on budgeting, and the need to prioritise among their expenses.
Saving: It is a wise thing to save for a rainy day. This Covid-19 pandemic is a good example to use to inculcate into their young minds the need to set aside a certain portion of income consistently and to build up a pool of funds for a potential crisis.
Giving: Donating to the community in need or giving tithes to religious purposes are some ways to help our children understand the concept of giving back and how money may be used to help others.
Investing: Approaching financial products with prudence is important. Beware the “get rich quick” mentality. Instead it is only with good strategy, knowledge and discipline that money can actually “grow”.
Necessary to start early
Risky financial commitments, credit-based lifestyles and wrong approaches to financial products are some of the ill-informed financial choices one could easily make in a lifetime. As parents, we want nothing but the best for our children. While education is an avenue for them to build that foundational skill to eventually become financially independent adults, it is also equally important for us to share with them the importance of financial literacy to cultivate the right mindset at a young age, in order to help them avoid unnecessary pit holes or debt traps, many of which may potentially be too huge to recover.
Mind & Hand is an EduTech platform that partners both educational industry players and private sector business employers to offer our students programmes that keep pace with technological change and that are relevant to the industry. We hope to empower our students with the skills, confidence and perspective to navigate the global skills crisis and prepare them for a workplace of the future.