Personal Finance: Encouraging Kids To Save and Invest
Note: broken lines indicate that conversations happened at different times but still on the same topic. I can’t just remember the exact dates as it has been a recurring topic several times a day for the days I was in Baguio.
I got my 7 year old niece (turned 7 last Nov. 4) interested in investing. This was unexpected but it got me excited!
It all started with this conversation last October 31:
Me: I’ll treat you somewhere as a belated (for the young ladies who turned 13 last September) and advance (for the kid) birthday gift. Where would you like to go?
Me: Oh, so you like SM?
Me: Did you know that you can become a part owner of SM if you lend them some money? (I was thinking along the lines of buying a stock of SM).
Niece: Really, tita?
Me: Yes. If you have at least Php 8,000.00, we can buy SM shares. Would you like that?
Me: So, start saving now and let me know when you already have it.
Niece: So, tita if I have Php 8k, I can become SM’s part owner?
Niece: Can I use play money?
Me: Hahaha! But no, you can’t. It has to be real money. So, save save save!
Me: If you want, you can invest in its condominiums. That will just be around Php 4,000.00 (I was thinking of SMPH). It’s cheaper than SM.
Niece. Ahhh, ok. So if condominiums, that’s Php 4K? And if malls, that’s Php 8K?
I saw an article that Henry Sy has joined the team that will be building the airport at Sangley Point.
Me: Look! SM will be part of the group that will build an airport. So if you buy some SM shares, maybe your money will also be used for that airport.
Niece: Wow, airport! So if I have Php 8K, it will be an airport, and if I have Php 4K, it will be on condominiums?
Me: Yes. (I just used airports, malls and condominiums to make it simpler for the child) So, which one do you like?
Me: Ok, then start saving for Php 8K.
My niece brought out her piggy bank, a recycled J&J lotion container that was one-third full, and showed it to me.
Niece: Tita, here’s my savings.
Me: It’s not yet enough but it’s a start. Make sure you try to save more so that you can become an owner faster.
Niece: Ok, tita. What happens to my money when I give it to SM? (smart question!)
Me: Your money will also grow when SM gains more profit. But there will be days when your money will also lose its value. But as long as you keep it with them until you grow up and become an adult, your money should have grown by then. So, once you lend it to them, it is best that it stays with them for the longest period possible. Do not withdraw right away.
Niece: Ah, ok.
Me: So, you want an airport?
Niece: Yes! Php 8K.
Niece: Tita, if Php 8K, airport and if Php 4K, condominiums?
Me: Yes. You like airport, right?
Niece: Yes, so Php 8K.
Before I left for Manila, I gave my nieces Php 10.00 (kuripot tita here 😛 ) each for their school allowance.
Me: O, don’t forget to save some for your airport ha.
Niece: Yes, tita. Php 8K.
End of conversation. But I’m sure this will resurface when I go home because….
Ha! I’ll include you in my project, kiddo! Let’s work on that investment of yours.
I already asked my sister (their mother) to check out BDO’s requirements in opening an account for my nieces and prepare these so that we’ll open their accounts on November 27. This way, all investments will be under my nieces’ names! I don’t want to mix it with mine. And I think they would be more inspired if they see their own names in their investments. And I’m thinking of UITFs now instead of direct stock investing since I’m not well-versed on stocks myself. Yun lang, di ko pa nasabi sa niece ko na Php10K na pala ang kailangan nya hehehehe. I’ll let her know and for sure she’ll still be excited if I show her the other companies where her money can be potentially invested in if she gets UITFs. Jollibee is one as of BDO’s September 2016 report but I am not really sure if maka-Jollibee yung bata hahaha!
I checked BDO’s savings options and there’s one for Junior savers (7-12 years old) where initial deposit is just Php 100.00. Sakto, she just turned 7 last November 4 hehehe.
It’s more expensive for the teenager niece because she has to now own a regular savings account and an ATM account requires Php 2K. Pero, sige na, pauutangin kita 😛 😀 . Sana may 13th month na kami by then.
I am also planning to require them to do little chores or reward them for maybe perfect scores in school? I don’t know anything about rewards system for kids but it will be an interesting research. I also plan to give the same amount every time they make a deposit. For example if they are depositing Php 20, I’ll give them Php 20 to add to their savings. With online banking, this can easily be done! Di naman siguro ako mamumulubi nito since maliit lang naman baon nila! Hahaha. But I also don’t want to underestimate them. Or I’ll just declare na I’ll give them half of what they save para safer for my wallet 😛 . If they are in school for 22 days and their daily allowance is Php 5, then that is Php 110/month IF they decide to save everything.
Lastly, I need to teach them that life isn’t just about having money. It’s more than that. Baka naman kasi maging obsessed sila at sa pera lang lagi naka-focus.
On another note, it was their mother that I wanted to teach about money management years ago. I even asked her to start listing down their expenses as a start. But that did not work out and she seemed not interested. So, kung ayaw ng magulang at mukhang interested ang anak, I’ll just focus on her kid! Hehehe. Tapos maiinggit na lang syang may investment ang mga anak nya, tapos sya wala hahaha.