One of the core concerns of any parent is finances – will you have enough to look after this child and meet his basic needs?

Adam Khoo, millionaire entrepreneur, best-selling author, peak performance trainer and father to two girls, shares just what parents should be doing financially, to be able to support and care for their family.

Saving and growing your money

1. Pay Yourself First

Most people will spend first, then save from “whatever that’s left”. No matter what your income is, you can and must put away a small amount of money each month. From the account into which your monthly income is deposited, have a standing order that transfers a fixed sum of money every month into a separate account. Don’t apply for an ATM card for that account. Get a cheque book if you must.

2. Manage Your Expenses

Parents need to check their expenses. Know how much you are spending daily, and what items that you are spending on.

List these down as it makes it easier to see where to cut frivolous and unnecessary expenses. Less than 10 per cent of people track their expenses.

You’d be shocked to find how much you could save with this simple practice.

3. Invest your money

Decide on what are the best investment vehicles for you – stocks, endowment funds, unit trusts? If you are quite financially savvy, manage your own money.

If you are looking at stocks, then even the simplest form – the Index ETFs (an exchange-traded fund is a basket of stocks that reflects the composition of an index, like the ST Index or the Dow Jones) can be considered.

Over the long term (defined as being at least five years and more), you could be looking at returns averaging between 10 and 12 per cent per year.

4. Make Sure You Are Properly Insured

Insurance is very important – hospitalization coverage is a must. It’s really about protecting your money for your loved ones and ensuring that they can live comfortably should anything happen to you.

5. Work Backwards

The largest expenditure a family will undertake is that of the children’s education.
Ask yourself: Do you want a local or overseas education for them? Find out what it could cost you x number of years from now and work backwards to see how much you should be setting aside every year.

Teach your kids to fish

Adam Khoo is also a strong proponent of leaving a legacy for your children.
“I don’t believe in leaving kids a lot of money. Let them earn their own. Teach them how to fish and you’ll be leaving them a more sustainable legacy.”
 

Khoo suggests the following things to do:

1. Inculcate money values in your children. But more importantly “live” those values – what you do is 1,000 times more powerful than what you say.

Are you buying the latest mobile phone or branded clothes while telling your children that money is hard to come by?

I learnt to be frugal like my dad, and I would upgrade an item only when it’s worn out or well-used.

2. My father said to me that the best way to kill someone’s motivation is to give him what he wants.

When I was 15, I sold corporate stationery, door to door. I understood then how difficult it is to earn money.

3. Kids have to learn to earn their money. Pay them for simple chores around the house. And teach them how to save from their allowance money and the magic of compound interest.

Play games with them, especially those that teach about money management.

4. If you are setting up a trust fund for your child, don’t tell him or her.