Recently the Jingkids team had a realization. Our childhood cultures directly impacted our relationships with money and the way we handle our finances. So, over the next few weeks, we will each take a few minutes to explore how our childhood culture affects our view of money both positively and negatively. We hope it encourages you to reflect on your own experiences and what messages you want (or don’t want) to send to your own kids.

My mom was told very clearly to go to college until she gets her MRS Degree (i.e. gets a husband) and then to drop out. So for most of her life and mine, she worked data entry jobs that she didn’t really care about. My father was a librarian who enjoyed his routines and to this day keeps all the bills and important documents in a basket near his recliner or on his desk.

We had a house outside of Boston that they bought for $25,000 in 1978, steady work, and were/are by far the most financially stable of our large Irish and Italian families. Money was certainly a concern at times, but rarely an obstacle, or we didn’t hear about it until it directly affected us. We weren’t able to go on extravagant vacations, but they insisted we leave town once or twice a year (a habit I will eternally be grateful to them for instilling in me), and so we visited old towns on the east coast that we could drive or take the train to. Nothing huge, just a change of scenery, a little history, and some interesting sights along the way.

We didn’t have to let the phone ring endlessly on (in the days before voicemail) like my aunt and uncle did, to avoid creditors. We didn’t have to rely on my grandparents to pay our rent like many of my relatives with lower paying jobs. We were able to somehow save enough for a Disneyworld trip when I was ten, but that meant no shopping trips for months afterward. My allowance went almost entirely towards comic books and my parents and grandparents took care of my savings bonds without me really having to do anything.

The first time I really recall talking to my father in-depth about money was when I got accepted to New York University (NYU) to study drama. We couldn’t afford it. I would have to take on tens of thousands of dollars in student loans in order to do it, and he would too. Accepting my position there meant my father would need to accept his political appointment to a government library position, leaving the public library he’d loved and grown into a bustling part of his community. I remember him telling me how I would be affected by student loans and interest for years to come (and I remember not caring because I’d be a famous director by then, so why worry – oh, the ignorant folly of youth), but I never remember my father telling me how my decision would affect his life and happiness.

Maybe he did. I know my mother tried to explain. I know I am still paying off my student loans, twenty years after graduating. I know that for many many years post-graduation, even while working full-time jobs, I needed him to bail me out a lot. Mostly, however, long-term planning and anything beyond how much my allowance could cover in comic books were not discussed. Maybe they thought that was for the best, and maybe things were much tighter than I could ever imagine and my father didn’t want to scare me. All I know now is that I’m certain my parents sacrificed a lot for my sister and me, but where our money went and how we could afford some things and not others was a bit mysterious to me.

I haven’t gone to the extreme other side when it comes to most of my own childhood, but in that respect, I parent quite differently. Ever since my kids could ask for things in the store or when LEGO so brilliantly marketed five more sets to them before we finished building the one we’d bought, I’ve explained the concept of money. It takes many years and much repeating, and we’re still teaching them. Especially in our current situation, when their mom is working outside of the home for the first time in their lifetimes, and we have a lot of privilege where we live. Every time they want something, we delve into how much they already have, and do they really need more LEGO bricks when we quite literally stack bins of unused bricks every day?

When we started playing online games, we made four rules, and one of them was “If you want to spend money in the game, ask Mommy or Daddy and we’ll talk about it.” We’ve said no as often as we’ve said yes to minor purchases, but we always talk about it and have them reason through why they do or do not need this to enhance their gameplay. They’ll often talk themselves out of it, to be honest. And when our oldest said he accidentally bought something because we hadn’t set up the parental control correctly, we asked him straight: “Can we trust you to have access to our bank card in Roblox, or not?” And after a second, he said “No,” which might have been the most trustworthy thing he could have said!

We still struggle with it, especially as we begin to transition out of the expat life and its cost of living perks. A lot of our money discussions revolve around how much we already have versus what we need to save money for — honestly in adult and child-related talks. When their ayi gifted them RMB 300 in hongbao last new year, we started them on the concept of “Spend 1/3, Save 1/3, and Donate 1/3.” I gave the boys a few options of how to spend their RMB 100, and they chose the LEGO Store (shocker). I remember their disappointment when I showed them where to look on the displays and how to calculate if they had enough for what they wanted. They briefly engaged in negotiating with each other to get a bigger set, then they found the perfect solution in an RMB 99 Ninjago mini-set and they could choose their favorite characters. Later at home, we upcycled some tins to make them both a bank and are still deciding where to donate their last RMB 100 to. (Can’t wait until they realize that USD doesn’t buy as many LEGO sets as the same amount of RMB).

The hardest part, honestly, is explaining how working more hours doesn’t necessarily bring you more money in a salaried position, and the importance of weighing mental health, love of a job, and the ability to survive into decisions made for and with the family when you’re lucky enough to have those choices. I have no doubt our feelings might be different if we were in more dire straits, and I appreciate that fact every day. Our decision to buy or not buy them a lollipop isn’t whether we can afford it, but how it will affect their teeth. That’s another huge privilege that allows us these conversations.

We have a lot of big decisions coming up that mostly revolve around money and happiness and the co-existence of the two, and as hard as the discussion is, we’re dedicated to talking openly about our struggles each step of the way.

KEEP READING: Teaching Kids About Finances: The Expat Kid

Images: Canva

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

Recently I have been asked by a lot of families in Beijing about Life Insurance. Maybe my article two months ago on Will’s & Trusts got people thinking, or more likely it’s the pollution and crazy Beijing roads.

Regardless of what it is in life which makes people inquire about life insurance, there should be only one key driver….’if I were to die tomorrow what would happen to my family and loved ones.’

Currently I am in the process of helping a client with his life insurance. Things in his life are great, he has just had a little boy and like any new father he is very happy. However, the birth of his son has brought back some painful memories. When he was around ten years old, his father fell ill and tragically died. My client was extremely fortunate that his father had put in place a life insurance policy that allowed him to continue his life as his father would have wanted. It is therefore of no surprise that when he found he was going to be a father his attention quickly turned to protecting his new family. My client is not really in a position where he has that much spare cash to spend on life insurance, particularly with all the costs a newborn can bring. Nevertheless, he wanted to put in place as much protection as he could afford.

I deal with many clients that do and do not have life insurance. For the ones that do not it is the first thing I talk about every time I see them. I believe it’s your duty to have something in place if you have children.

No one wants, or likes, to talk about death and this is understandable. However, that should not make planning for it any less important. One thing we know for sure is that death is inevitable, so we have to think about it at some point. So how much insurance do you need?

Some people I meet have great insurance benefits as part of their job. Others have substantial personal wealth so that they can self-insure through their savings. Unfortunately, the vast majority of people I meet are under insured. Alarmingly, a lot of people I meet do not have any insurance because they think they can’t afford it. Let’s make one thing clear now; insurance is always affordable when you consider the risk to your family not having it. Insurance that you put in place could be what allows your family to keep their home or your children to attend college.

I often hear the phrase ‘life insurance is the worst investment you’ll ever make’. People say this because the only way to get a return from it is if you die. While I understand the sentiment of this statement I do not agree with it. Life insurance is the one best investments you can make with your money. What we must understand about life insurance is that it increases the power of our money. Paying USD 1 for insurance might mean my family will receive USD 1,000 if I die. That’s a 1,000 percent return on my investment, pretty good if you ask me.

Available options?

Term Insurance
This is very simple, what you do is nominate an amount of money you would like your loved one to receive if you die. How much? At the very least I advise everyone to have insurance that will pay off major debts such as a mortgage. If you are the primary wage earner, I also recommend an amount of money that is capable of generating 75 percent of your income.

Whole of Life or Universal Life
As the name suggests this type insurance covers you for the whole of your life. A key feature of this insurance is that it has a cash value that you can redeem at anytime. A lot of the people I speak to like this because they can cash the policy in and receive an investment back which can make the insurance very cheap or even free.

Critical Illness
This type of insurance pays a cash amount on the diagnosis of a terminal illness such as cancer. I find it is often overlooked by people as something they do not need. However, the fact is you are 75 percent more likely to die of a terminal illness than natural causes.

As a point to close on, I would like to repeat that anyone who has financial dependents has a duty to have some form of protection in place for their loved ones! How much differs for everyone, but trivial matter such as time and cost should never stop you planning.

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.

Photos: aag_photos (flickr)

Property is, and always will be, one of the most popular vehicles used by individuals to build capital and receive income. Most people choose to invest in a property for one basic and simple reason; they understand it. For many the modern financial world is a confusing and dangerous place. Every day brings another news story of impending financial doom and understanding complex hedge funds or derivatives is a hard task even for financial professionals. However, when we talk to people about property they always seem to be happy with their investment and see safety in this type of asset.

For me, one of the most appealing advantages with a property investment is that you can rent it out and use this income to pay off the mortgage used to purchase it. Over time this means you will end up owning the property and in the future you can use the rent to provide your family with an income. This is a great system but not without its difficulties. Managing a property can be time consuming, especially when we are already busy working and raising a family.

Usually people focus on buying property in the country where they live. This is all well and good if you are a native to that country, but as expats who plan to return home one day this might not be the best solution. Living in China we hear all the time about property bubbles and the difficulties of foreign ownership, which can make it less attractive to buy a property here. Over the years I have seen many of my clients struggle with the day-to-day hassles of owning a property in China and they also have significant problems removing the profit when they leave.

A lot of people are most comfortable focusing on buying properties in their home country. For most people, investing back home is better than choosing a market where they have no knowledge of or any emotional connection with. Unfortunately, understanding and being comfortable with a market does not equate to making a good investment. I understand and, to a certain extent, agree with the knowledge part of this argument. But how many of us, hand on heart, really ‘know’ any property market. If someone was to knock on your door every day and tell you the current value of your house, I think you would be surprised how much the price changes. The emotional connection side is something I definitely do not agree with. No investment should ever be based on emotions. The best stock traders in the world do not care about where they buy shares, they just look for value.

My advice is to invest in a developed, regulated and trustworthy market where there is value to be had. For example, Paris and London are two of the most popular property markets in the world and it is easy to have confidence in both of them. But do they offer value for investors? Sure, it is very likely that any investment in either will provide growth after 20 years, but could you gain more somewhere else? For me the best market in the world at the moment is Berlin as it is a very safe market but significantly undervalued.

Another option that many people who live in the Far East choose is a market in South East Asia like Thailand. There are some excellent opportunities in SE Asia, but political instability and regulations over foreign ownership of land lead me to question how ‘safe’ these markets are.

Buying an investment property is something we will likely all do one day. Whether this is something you are doing now, or will do in the future, here are a few simple guidelines to follow:

1.  Real Ownership – Beware of property funds and joint ownership property projects, often these companies are raising capital to grow their business and liquidity is a major issue.
2. Off-Plan Property – Do not invest in unbuilt off-plan property unless you are an experienced investor and know what you are doing. You want to buy a property not become a developer.
3.  Laws & Regulations – Invest in a country where you trust the government has put in the correct regulation to protect you as an investor.Value – Look for a location where the property market is undervalued and provides potential for growth in price and income.
4. Paperwork & Research – Make sure you read all of the Terms & Conditions and do a full due diligence on all of the relevant parties. An established track record of success is a good first step here.
5. Ask for Help – If you are not sure or confident what you are doing then speak to a professional.

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

About author
William Frisby 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.

Photos: images of money and markmoz12 (flickr)