You’ve done it. Graduated. Now you’re headed into the great unknown to follow all your college dreams. Yet with this freedom comes great responsibility, right? Right!

Part of being an adult is managing your coins (not those digital ones in your WeChat wallet, but the real, grown-up ones) as adults do. College is the best time to develop healthy financial habits and start building wealth, even if you don’t have a lot of money coming in. And the good news is you don’t have to wait until you leave for college to begin. Saving for tomorrow actually started yesterday, so let’s get going!

Know Your Current Money Moves

Start tracking your money habits now so you are aware of your money moves. Begin by taking a look at how you are currently spending your WeChat dollars. Not so sure? Pull up your WeChat wallet and go to Transactions. Take out a pen and paper and record your purchases for the last 30 days. Where did most of your money go? Food?  Entertainment? Shopping? Make a list of the total amount for each area and ask yourself: What did I discover about my money habits? Am I more of an eater outer, or am I the next master chef? Am I a person who likes to hang out with my friends? Or am I a shopper? Knowing yourself and how you spend your money is the first step in creating a budget that works for you.

Here’s a challenge for you. Until you leave for college, give up one of your most purchased small items and save the money you would have spent. You’ll be surprised to see not only how often you purchase that item, but how much you are saving instead.

Budget: Not a Bad Word

Budget. Most people dread this word because it sounds super restrictive. However, I challenge you to think of your budget as your “say yes” buddy. Do you want a dream vacation for spring break? Yes! Then you need a budget. That new pair of Jordans? Yes! Then you need a budget. Your budget becomes your best friend when you think of it as a means to have what you want!  So, how do you create one of these budget besties?

First, write down all of your expenses. These include your fixed expenses – those expenses you must pay each month. Hello tuition, rent, and transportation costs. These may even include subscription services like Netflix or Spotify, or even your phone bill. Typically, these expenses are the same amount monthly.

Next are your variable expenses. These vary from month to month and include things like groceries, eating out, shopping, or entertainment. Typically, you do not spend the same amount every month in these categories.

Looking at your two lists, circle those items that you consider Have Tos – typically your fixed expenses. Then, draw a box around those that you consider Want Tos – typically your variable expenses.

Once you’ve determined all of your expenses and added them up, now comes the hard part: subtracting them from your monthly income. Your monthly income is the total amount of money you have coming in. Think of this in terms of money from your parents, your part-time job, side hustle, internships, scholarships, or financial aid.

If you have money left over, hooray! You’ve budgeted correctly. If not, that’s OK – you may need to make some adjustments to your Want To list. Remember, your goal is not to be in the negative. This is where the 50/30/20 rule comes in.

Ugh, I dislike rules as much as the next person, but this one sets you on the path towards financial success. The 50/30/20 rule states that you reserve 50% of your monthly income for your Have Tos, 30% for your Want Tos, and 20% for savings. Here’s how you do it. Let’s say you receive RMB 10,000 a month as your income. Remember those things called needs – those expenses you need to pay, like rent, phone bills, etc. After you get your income for the month, 50% of your total income goes towards those needs, which in this example would be RMB 5,000.

The 30% of your income is for your wants – hello matcha latte on the daily! Be careful here, because in our example only RMB 3,000 goes towards spending on these wants. Here’s where you really have to get real. How much do you really want your want? If it’s really, really, then that’s ok. This just means you may need to give up something else you only kind of want. It’s all about give and save.

The 20% goes directly to savings, so deposit that remaining 20%, which in our example is RMB 2,000, and forget about it. Here’s the thing about saving: Saving now means living comfortably later. Placing 20% of your income into an interest-bearing savings account, or investment account will grow your money even faster. Even better if you set up an automatic withdrawal to your savings each month. You won’t even see it!

Get Techy With It

There’s an app for that! When you are first setting out on this budget journey, it helps to have help … and apps are the way to go. Here are a few you can try:

· Mint – Easy to use and stick to, Mint securely links to your bank accounts and automatically inputs every transaction, making it easy to see where your money is going. Plus, they give you reminders to help you with overspending and have stellar tips on creating a budget. Win, win.

· YNAB (You Need a Budget) – This is a super helpful app that assists you in tracking every dollar you spend. Talk about knowing where your money is going. YNAB helps you become intentional with how you spend your money.

Discounts, Baby…

Here’s the lovely thing about being a college student. There is literally a student discount for EVERYTHING. Netflix, Spotify, virtually every streaming service, restaurants, clothing stores, computers, cell phones – you name it and pretty much almost every business around you has a student discount that you basically only need your college ID to access. If you’re not sure, ask. Make sure you are getting in on all the deals. Check out apps like UNiDAYS and Honey for more deals.

Use your campus fees. So, for college students, there’s a little fee called a student usage fee. Basically, it’s what your college or university charges you to be a student there. You get charged this fee whether you take advantage of it or not … so use it or lose it. If you need to print anything, print on campus instead of using your precious ink. Use your campus gym to get your sweat on. And take as much advantage of your campus meal plan as you can. That’s right, most colleges and universities offer a meal plan, which basically means … you eat. For free. On campus. And at most times, whenever you want. Super easy way to cut down on your food budget.

Insta Inspiration

Sure, we follow influencers for entertainment, style, and fashion, but what about money?  The new trend in influencers includes finfluencers, who are all about financial literacy. Add these to your feed for a healthy dose of money management info:

Sara Finance @sarafinance – Interested in starting your own business? Sara is definitely your go-to. Also make sure to check out her YouTube channel: Sara Finance

@napkinfinance – Everything you’ve always wanted to know about money, drawn on a napkin. Check out their feed of fun and quick money advice.

@TheFrugalGene – Meet Lily, your go-to for tips on how to save money.

@calltoleap – Meet Steve Chen, a former math teacher who helps beginners learn about investing and the stock market.

Dream Big … Then Add Tax

Here’s the thing: You have an amazing future out there, and it’s never too early to start visualizing what that future entails. Create a visual financial future vision board. Find images and words that represent the future financially savvy you. Place them on a poster, or make a nifty Canva screensaver and look at it daily. Visualization helps you practice success, training your mind to see your dreams in real-time.

Images: Pexels

When it comes to family money matters, the kids should arguably be a part of purposeful discussions that help them to foster the right kind of attitude and relationship with money. In addition to talking openly about money, parents may wish to support this process by offering their kids an allowance. All parents want to raise modest, patient, and grounded kids who can develop into financially savvy and wise savers and spenders, but how should we approach the issue of offering our kids money?

One of the most contentious issues around the giving of pocket money to children is not only the amount that is given on a weekly or monthly basis, but whether or not this transaction should be one that’s earned. Should our kids work for their allowances? Cleaning the car, taking out the trash, cleaning their room, and washing the dishes are just some of the most common sets of chores traditionally asked of children in an effort for them to be taught financial responsibility and the value of money.

No one wants to raise a child with a sense of self-entitlement, and having your kids earn their pocket money may seemingly be the best way in which to support the cultivation of a good work ethic and a meaningful understanding of money matters. However some parents would argue, as I do, that chores are foremost an integral part of family life, and household tasks should not be seen as a transactional tool whereby kids can trade in responsibilities for compensation. Household chores should be considered core elements of a child’s contribution to the home and family.

The Zupko family have adopted this philosophy and garnered their inspiration from the manifesto laid out in author and financial columnist Ron Leiber’s The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. This practical guide book for families is intended to provide a detailed blueprint for parents tackling family money matters related to: the Tooth Fairy, allowances, chores, charity, saving, birthdays, holidays, cell phones, and other issues that are directly related to finance. Parents are encouraged to teach and demonstrate healthy money management by having their kids take their allowance and allocate it evenly between save, spend, and share. “We let them decorate a bucket with a label for themselves so they really felt like a part of the process,” said Julia Zupko, mother of 11-year-old, Natalia and 9-year-old Josephine.

The Zupko Family

Helping our kids to differentiate between tasks we must all learn to contribute towards in a family, and the healthy management of money and expenditure, means that our kids will receive a more well-rounded philosophy and approach when it comes to domestic labor and how to spend and budget, “We are now starting to use a spreadsheet instead of physical buckets here in China because physical money is less relevant, where, in addition to using it as a credit/debit/balance system, we are also considering adding in a monthly APR so their money grows just like a real savings account and further, keeping track of the amount they would have had, had they not spent it,” says Zupko. She went on to say that there are no rules attached what her daughters can spend their allowances on, however perspective and advice is offered to support wise decisions.

The Lim family have a slightly different approach, which seems to embrace a more flexible process of offering ad hoc allowances to their 6-year-old boy, Zac, “We give pocket money irregularly, on demand and in reward”, said father of Zac, Michael Lim, “There is no set limit, if he likes the look of coins more than notes, we give him that.” When asked about how Zac’s allowance is earned I found it interesting that the Lim family’s allowance philosophy is not so much based on chores as such, but rather the triumphs and accomplishments of their little boy, “Zac receives an allowance by achieving goals and milestones, i.e. learning new vocabulary, listening to what we say, and picking up after himself when playing.”

For Lim, an allowance is a reward, so in that regard it is earned and therefore is a gesture that aims to attach meaning to the monetary gift. “We are promoting positive behaviors by rewarding them with food and toys, plus money in his piggy bank”, he said.

Although these two families are using a slightly different approach to the issue of raising kids with an allowance, the end game couldn’t have more synergy. These families are also dealing with family money matters with kids of different ages and therefore the nature of their methods will reflect the emotional, mental, and physical characteristics of their children. The Zupkos are teaching their kids fiscal responsibility, where, as is appropriate for Zac’s age, the Lims’ focus is on reinforcing the practice of positive behaviors related to fostering a good work and learning ethic.

The philosophy concerning allowances for kids may also adapt and change with time, and be built upon the unique attributes and makeup of each family. Both the Zupkos and the Lims are trying to support and encourage their kids to harness a greater sense of responsibility and a healthy attitude towards money, its worth, finiteness, and of course all the wonderful results of wealth-building.

What are often not discussed among parents and families however are the systematic elements of high and low-income households, which are directly connected to inequalities and segregation in education and housing. Some families have no choice but to raise children who will ultimately have to financially fend for themselves, and go without until they can. What lessons can be taught to these kids about money? How can parents of higher-income households balance the giving of an allowance with ensuring that their approach does not nature an attitude of entitlement?

The charity element that the Zupkos have implemented ensures that their kids are thinking about others and their needs; this could perhaps be a tool that can be used to combat the raising of prima donnas and an attitude that fails to acknowledge the importance of giving and empathy for those who do not have the same privileges. In regard to families who can’t offer physical money, lessons, praise, emotional support, and the giving of your time and energy can also be used to teach kids responsibility, accountability, and respect.

Every family is different, and we all have to do what works for our household when it comes to money matters. Below are a few reasons why giving kids an allowance can have a positive effect. However there are a plethora of other ways to teach kids about money – chocolate pennies, piggy banks and matching toy coins, trade-offs with selected items, and activity-based transactions can also be used to talk money and cultivate the right behaviors and attitudes towards giving, receiving, and the value of time and finance.

5 reasons to give kids an allowance

Teaches them how to budget

Make sure your kids are required to put a designated amount of their allowance into savings, and when spending money runs out, they will learn about healthy spending and preparing for unexpected expenses.

Helps give them a good work ethic

If you require your kids to work for their allowance, select the kind of tasks that work for you as a family and are not too connected to everyday contributions that all kids should be doing without compensation. If your kids are slightly older, you may ask that they run an errand for you, demonstrate generosity by helping out a neighbor with a chore of some sort, or learn a simple dish or snack they can prepare for the family on request.

Teaches them fiscal responsibility

Budgeting is arguably one of the most important skills we all should learn as early on as possible. It helps kids to be more responsible with their spending as they get older, and prepares them for the wider world of money management. What’s APR? How can one budget for shopping, travel, and disposable income spending? And how can one plan/save for short-term and long-term financial goals?

Helps them to understand what it takes to run a home

I had no idea how much money went into keeping my parents’ household running, and so when asking for extra pocket money never considered what expenditure was attached to keeping family life functioning. Kids need to learn how much money you spend on basic things, like food, utilities and even desirables, like toys and candy. Giving an allowance shows how far money will go, and by sharing some of the costs for things like food you can demonstrate how many allowances it would take to feed the family, so that finance is not an intangible concept.

Shows them their effort in the family is appreciated

Again, if you require your kids to earn their allowances, using the method above, you are also showing your kids how much you appreciate their contribution. Kids, particularly when in their teens, can feel like their help around the house goes unnoticed and without thanks. It’s all about balance. Yes, we should all contribute to household tasks but nonetheless, praise, thanks, and/or an allowance goes a long way in acknowledging and reinforcing the positive behaviors you would like to see more of.

Do your kids get an allowance? What’s your philosophy? Comment below!

Photos: courtesy of Julia Zupko, Michael Lim, Pixabay

While educators agree that money lessons involving currency, addition, and savings are essential, they also remind us that there is more to money than cash and piggy banks.

Lessons in money management taught through trial and error
A story for children with generous grandparents, Alexander, Who Used to Be Rich Last Sunday by Judith Viorst, is a rags to riches story wherein Alexander receives a generous sum from his grandparents, but loses it almost as quickly as he received it.
Gerard Clyne, Headmaster and Co-founder of Hyde Academy, recommends the skillfully drawn black and white picture book for the “valuable lessons in money management, handling adversity, and dealing with the consequences of one’s actions.” More importantly, the book teaches the value of money using Alexander’s humorous interactions with those around him as he struggles to control his expenditure. Children learn that “impulse buying and instant rewards don’t always provide long-term happiness.” In Alexander’s case, it brings him poverty and a useless pile of junk.
In the story every child can identify with, Alexander begins with high hopes as he imagines the endless possibilities money can buy him. While “he knows that he should save his money so that he could buy a walkie-talkie at a later date, he gives up his long-term goal for short-term gratification.” In fact, Alexander is punished for each poor financial decision he makes, but each time he fails to recognize how his misfortune is a direct result of his own actions.
As the previous Math and Science Coordinator, Clyne recognizes a great tool for teaching integrated literacy and math when he sees it, and recommends it for teaching money use. Adults can encourage children to keep track of Alexander’s monetary spending by trying “to figure out how much each item costs, the amount of money Alexander has spent as the story moves along, and how much he has at the end of the story.” Children will enjoy keeping track of Alexander’s odd purchases, “from buying chewing gum, a one-eyed teddy bear, and a half-melted candle to rented snakes,” exercising real world math skills while improving their sense of money. As Alexander learns “how far his money can take him and what happens when it’s gone,” children learn the importance of saving money and developing good spending habits.
The ending of the story is foreshadowed in its title, and the story takes children in a full circle from rags to rags, challenging the reader to end the loop. “Every action has its consequences,” reminds Clyne, as he highlights how the story teaches the importance of responsibility and how facing up to one’s consequences is what growing up is all about—profound lessons in money management for children four to eight years old.

The value of money is in using it to help others
The heart-warming narrative of A Chair for my Mother by Vera B. Williams is about how money can be used generously and selflessly. The main character, Rosa, is from a family consisting of only her mother and grandmother, and we learn that they are recovering from the tragedy of losing their home to a fire. Carl Trewin, Assistant Director of Studies at TSL Britain, recommends the uniquely illustrated picture book to children in grade three or higher, while emphasizing how its message of empathy can be appreciated by all ages.
In the story, Rosa’s mother works long days waitressing at a diner as the sole provider of the family, so Rosa and her grandmother help out by pooling their resources and putting all their pennies into the same jar. Their local community bigheartedly come together and raise funds to replace the furniture Rosa and her family had lost along with the rest of their belongings. Meanwhile, children can follow along as Rosa and her family try their best to fill up the coin jar—all the while wondering: will they be able to save enough money to buy Rosa’s grandmother a new armchair?
The story can be used to introduce a non-linear narrative to young readers, and open up a values-based discussion for older readers, says Trewin. “A number of wonderful conversations open up when reading this book with a young person: Why did the community buy new things for Rosa’s family? Why didn’t Rosa’s family have enough money?”
Trewin likes the book for the warm, comforting feelings it incites, the positive familial relationships it models, and the happy ending we all wait for.  A Chair for my Mother emphasizes to students that money is not an end in itself but should be used as a means for people to share moments with ones they love.” Not only does the story create positive associations to money, but “it is dripping with examples through which to explore empathy, from the community banding together to replace Rosa’s family’s belongings after a house fire, to Rosa’s concern for the mother and grandmother raising her.”  Young readers will especially appreciate how the story reinforces that no person or contribution is too small to make a difference.

This article originally appeared on page 34 of the September 2016 Issue of beijingkids magazine. Click here for your free online copy. To find out how you can obtain a hard copy, contact distribution@truerun.com.

PHOTOS: COURTESY OF HYDE ACADEMY AND TSL BRITAIN

Most people learn more about money skills from their parents than from any other source. So, your kids will be learning about money from watching and listening to you. In the first part, we looked at tips for younger children and here are some top tips for older children.

Real World Situations
As your Child gets older, a coin jar or simple games may become less inspiring and they will likely be more stimulated by real world financial situations. Start to bring them to the bank with you and have them understand why you are going there. It is a good idea to start to talk openly about the family finances, not exact salaries, but the cost of holidays, pension savings and things of a general nature. Here are 3 top tips for older children:

1.Open a Savings Account
Going to the bank and making deposits is a great start to learning about saving. Although interest rates are low, the point is to regularly contribute to the account and save for a long-term goal. At most banks, a savings account can be opened for free for a minor. If children under 18 open an account at the bank their parents use, they may get a break on fees. However, some banks require account holders to maintain an average monthly balance or make automatic deposits to avoid fees.

2.Teach Them About Compound Interest
Saving money is a smart way to learn the algebraic lesson of compound interest. Money grows over time in a savings account, for example, and can be a good motivator to save. If you really want your children to see their money grow, have them invest in a mutual fund that should increase in value faster than a savings account. Warn them that mutual funds can drop in value, and go to your broker’s website to show them graphs of how mutual funds you own have done over the years. Remind them that their money is in a long race, not a short one.

3.Let Your Child Make Mistakes
Sometimes the best lesson comes from a poor decision, especially when your child is young and the financial loss won’t be so great.

When my colleagues son got his birthday and Christmas money last year, he rushed out and spent it without thinking. After spending most of it, he realized that he didn’t have enough to get the video game he wanted. He wished he had thought about it first before he spent it. But now, he saves up for the things he really wants and thinks before he spends.

Becoming Financially Independent
Becoming financially independent usually has two interpretations. Firstly, it is your child becoming financially independent from you as parents. Secondly, it is achieving financial independence to the point where you no longer have to work if you do not want to. The latter is an extensive subject so we will just consider the former.

If you think that the “Bank of Mum and Dad” will be closed for business once your child graduates and enters the world of work then think again. As of 2014, 59 percent of parents provide financial support to their adult children who are no longer at work. The “Chadult” generation has emerged over the last 20 years and parents on average now do not expect their children to become financially independent until the age of 38. If you want your child to become independent quicker, then follow these 3 top tips:

1.Set Specific Goals
Goals define what financial independence will look like for each of us. Goals, particularly specific goals written out with timetables, can motivate us to initiate and stick with the other keys to financial independence.

2.Invest
To build financial independence, your child will need to earn a reasonable return on their savings. A savings account alone is not enough. Invest in stocks, bonds, and other assets that involve an acceptable level of risk. Yes, there’s the risk of some loss of principal, but understand that investing is for long term goals that are at least five years away. When they are closer to reaching their goals, shift the invested funds into those lower earning but less risky savings accounts and money markets.

3.Stay Invested!
One of the big mistakes many investors make is waiting to invest until the market is really strong, and then bailing out when it sinks. In short, they buy high and sell low. Get in and stay in, and make adjustments if necessary. Avoid the temptation to dip into long term savings for short term pleasures, your child will thank you in the long run for your guidance!
 

Please note that beijingkids does not necessarily endorse the views presented in this article.

About William Frisby
William originally arrived in Beijing as a finance guy on a bicycle and will probably leave as a finance guy on a bicycle. He works for Premium Finance Group (PFG), a financial consultancy that has been established in China for over ten years. PFG offers clients no-nonsense, personalized advice and serves the whole of China from their Beijing and Shanghai offices. Services include international property, investment, insurance and financial planning. To contact William, email william.frisby@premiumfinance-group.com.

Photo: Socialmoms.com