Parents are more aware nowadays that financial literacy is important for kids. If children grow up without the knowledge of handling money, they will end up paying for debts or credit card bills when they are old.

We teach children about money as they grow up. For young kids, it is probably harder for them to understand. I made use of the idea of using what kids like to let them learn about money first. This is suitable for kids from about three and a half years old.

This lesson is about "You cannot spend more than what you have."

I gave my two kids sixty cents each. Each of them spent twenty cents playing games. They are now left with forty cents. They decided that they want to buy sweets and chocolates instead of spending the remaining forty cents on games.

We proceeded to the candy store. They politely asked the shopkeeper how much the various chocolates, sweet and crackers cost. Most of them cost more than forty cents ( about sixty cents to a dollar) except for a lollipop which cost exactly forty cents. I gently reminded them that they had only forty cents and that I have no more money. They finally decided to get the lollipop even though it was not their first choice.

The lesson is that even though they like the chocolate more than the lollipop, they cannot buy it because they are only left with forty cents. I would not encourage them to borrow money for daily pleasures in life (unless it is for a calculated risk business). I thought it was a pretty good lesson because the children still got a lollipop in the end. It was a win-win for them and for me. If they cannot find anything for forty cents or less, then they cannot buy sweets. They could, however, use the money for games instead. It is their choice.

This seemingly simple theory is usually forgotten when we grow up. There are simply too much temptation for us that we find it very difficult to resist. There are perpetual sale the whole year round and most of us try to comfort ourselves by buying things we do not really need just because it is cheaper than the usual price.

There are new gadgets and new models of everything. (e.g. handphone, television, computer etc) We are nearly always tempted to buy new and better things. However, are they really necessary? There is no issue if you have excess money of course. Most of the time we do not really need these things but it would be 'good' to have them.

Be aware and do not fall into the trap of advertisers. Advertisers have to do their best to market their products and make sure you feel you must have it. Think about it seriously before buying it. The old model may work just as well but not as trendy. Spend where it is necessary and where you can get the best returns. Remember to weigh the advantages and disadvantages.