What are the psychological influences and challenges for students to be Smart Money-User these days?

Carol Yip has a mission to accomplish. Her mission is to combine her academic achievements in finance and her passion for psychology, to promote smart money spending, saving and investments to young adults!

To begin with, she provides solution to lack of money skills education in our tertiary education system by creating the Smart Money-User program for students. This program teaches and coaches students the important money skills and financial tools that are not taught in school, college and university.

Besides running Smart Money-User program, she has also written her first book, entitled Smart Money-User. This book, aimed at bolstering good money habits in young adults, can be found at all leading bookstores in Malaysia.

To enhance her profession skills, Carol is currently pursuing her Masters in Counseling (Psychology), specialising in financial coaching, counseling and psychology to empower people to be smart money-user and not being “financially victimized” by environment, people and situation.

Remember the days of simple life without Game Boy, Sega Genesis, Nintendo, PlayStation and Xbox, students in school were having fun playing Monopoly, Scrabble, Snake and Ladder board game?

Lifestyle for kids these days are influenced by temptation and desires created by the advertisement & promotion, media, movies, music, magazines, TV shows, pop stars, fashion, Internet and digital devices. How do such influences affect our children towards the value of money?

Such stimulus causes them to value money less by exchanging it with fun, pleasure, excitement, self-esteem and confidence, relationship and friendship.

One can buy and sell almost everything and anything or enjoy entertainment all day long over the Internet. It is “The World that never sleeps” for people to shop, gamble, watch movies, listen to music, make friends and the list goes on. It makes one feels that the computer is a “fun machine” to make money and for enjoyment.

Parents provide material things like iPods, DoPods, MP3, Portables, MP4, mobile phones, Pocket PCs, Palm devices, computers and extra-curricular activities for their children are facing increasing pressure to “keep up with the Joneses”. Feeling guilty not able to spend time with children may be a reason for such provision.

Besides prevalence of "extracurriculars" and expensive lifestyle, parents also get stressed up to provide their children an education, with a hope that their children will get a good job to earn a living.

Financial institutions are not teaching people to be money-wise by creating convenience to get "invisible money" to spend. It is almost “free money” with easy approval of credit cards, loan facilities, debit cards and mobile money (using mobile phone to make credit purchase). Money is no longer “physical”.

For kids who are having debit card or using parent’s supplement credit card to splurge on friends or shopping, will they grow up spending wisely or lavishly?

It is also challenging to parents when children today are living in the “World of Creative Entrepreneurs and Innovative Technopreneurs” of different cultural and social experiences, fads, crazes, and manias, due to Internet, digital technology and media influences.

Heard of teenagers voting for their idols in the American Idol or Malaysian Idol TV show, using their mobile phones, spending hundreds of dollar to cast their votes?

Even though our children these days are growing up much faster and getting matured in early age, the society is growing up even faster in this K-economy with young adults (born in the 80s and 90s) of Generation Y becoming bold, ambitious, innovative and want to break the mould to do things differently from the Generation X

With the speed of developments in science and technology, today’s children are going to find it difficult to survive tomorrow unless they are highly intelligent or incredibly creative.

They may need to stand out in the community, society and workforce. If it is just an ordinary Joe, then it best to live an ordinary life and not pretend to have money to impress others or to fulfill some personal desires, temptation, fantasies or dreams.

Heard of students selling home-made CDs of songs, games or movie download from Internet or made by using simple electronic and digital devices at home? And students create website that sells just about anything one can think of over the Internet?

How about students selling their mobile phone credits in exchange for cash? Or selling their computer games score for cash to friend is not able get high score of the same game?

It is becoming serious problem where teenagers running away from home or school to make money because they have been influenced by others or because someone promised them a good future with money and luxury in life.

Therefore, instilling good money values to children is important. And these values go beyond just having lots of money. Besides family and life values, children must learn that money should only be earned through honest means, should never be used to manipulate, as a crutch or weapon, and that it should never be used to measure one’s self-worth.

Many people are being “victimized” by money. Money is only a medium of exchange for living and survival, yet it is often overlooked at home and in school. It becomes medium of exchange for relationship, friendship, happiness, luxury, enjoyment, power and status.

Many children attend life skills workshop like leadership and classes like music, art and dance, to learn a skill may be used to earn future income. At least, they have a choice to pursue their interest or passion to make money.

But do they have ideas what to do with money when it finally arrives? To keep it? Or to spend it? Some who are borne a natural saver or stingy, they will keep the money. One wonders if it is a skill or habit they learn from school or from parents or is part of family genes?

How to invest money wisely? Is this investment skill born with or learnt from parents, schools or friends?

Psychologist would say that a child’s early years are the most important years that shaped behaviour and habits. The financial deck may be stacked beginning in childhood, regardless of gender.

The child’s upbringing and social environment in which the child grow up, the early messages received about money and the emotional make up will conspire to define how well he or she handle money as an adult, to be financially successful or broke.

Ideally, the child’s financial education starts at home but there are parents who still either shrug off that responsibility or postpone it until “the child is old enough” to understand. Unfortunately, it may be too late.

Probably, being a parent is even more difficulty to teach own children about money when kids get to see and experience how parent treats money.

Can parents stop their kid from spending their pocket money when they personally like spending money?

If there is severe lack of financial education at home, today’s teenager is forced to build financial knowledge from various sources and personal experience with friends, peers and people they mix with.

Most of the time, is through trial and error or maybe after many painful and difficult experiences. But what is worrying is our brain tends to store bad experiences as memory better than the good ones. Think about it, do you recall your bad financial experience easier compared the last time you were feeling happy about your money?

Do our children get to learn how to be smart in using money in school? Colleges and universities offer degrees that teach the students to become a professional or business person to earn money but not how to be money-wise.

Don’t you think time is now for the schools, college and university to consider having a subject on “Money”, teaching the students money skills, besides giving teaching them to be good academically?

Parenthink! October 2006
You ‘n’ Your Child

AN INTERVIEW WITH A FINANCIAL PYCHOLOGIST & COACH
We sat down for a chat with Carol Yip, a Financial Psychologist, Coach & Author of "SMART MONEY-USER" book at the Financial Planning Association of Malaysia (FPAM) in Bukit Damansara. The interview revolved around financial planning as well as money management. Interview by Jasmine Wong.

Jasmine : Please introduce yourself to our readers out there.
Carol Yip: I am a Financial Psychologist & Coach and my company is Abacus For Money, which provides financial advice and coaching as well as conducting education workshop and training in money skills to individuals. I focused on money skills education because I believe that lack of personal money skills and personal financial literacy when a child in growing up is part and parcel of the financial mistakes make in life.

Our belief in money is influenced very much during our childhood, with our parents and environment that we grew up. As we live though the years, life changes according to our behaviour, emotions and habits, that include influence from the lifestyle, environment, circumstances and situations. Our financial situation will be affected. Financial path that we walk through our life depends on how well we manage our life, and how we deal with our money, that is part of our life!

I teach and help people to understand their behaviour and emotions towards money which will empower them to use money smartly, so that they do not fall into traps that will cause them financially distressed. If we have the right attitude and money skills to use our money smartly, we will be empowered to achieve better things in life.

Jasmine: Is there a relationship between finances and moral values?
Carol Yip: Both components are closely related. Today’s society is riddled with all sorts of social problems like robberies and crime. It’s because the people who are involved in such activities need money. Each of us needs money to buy food, to support ourselves and family. Without money, it becomes difficult to survive. Some may take the easy way out: either borrowing money or succumbing to crime to get money. Apart from that, money is also the cause of a person’s greed, hunger for power, fame or success and the list goes on. So it’s clear that there is a relationship between money and moral or life values.

Jasmine : Please give us a piece of advice on how to plan our finances and manage our money.
Carol Yip: Before starting a plan, we have to be aware of our status. What is our position in life at this moment? What is our “financial self worth” at the moment? Count how much money you have in your pocket, account, and assets you own. Do this in a properly documented approach, prepare your personal Cash Flow and Balance Sheet by the month, track your spending and carefully analyse the information.

Next ask yourself what do you want in life that can be represented in financial terms. A comfortable and luxurious life? That’s when you need to set financial goals. And all these need very careful planning. Our life financial planning depends on our wants and needs in life as well as our life philosophies. Planning seems easy, as it can be a mere fantasy, imagination or just something conjured up in our minds. Are we able to make some of our fantasies and dreams come true? Most of us may not be capable of turning our plans into reality, maybe due to lack of self-discipline, time and so forth. There are just too much temptation, desires and unexpected influences out there in the real world. That’s why it is so difficult to realize plans.

Psychologically, we become disappointed when our plans, goals and dreams do not come true. We begin to become despondent and give up. How can we motivate ourselves? Plan something realistic, small and reasonable. Being able to achieve those small goals motivate us.

My advice is to start by getting to know ourselves better, then proceeding to make changes and improvements in our lives, namely habits and behaviours. How can we change? By our actions, experiences and feelings of a different variety of actions.

Other influences and temptations including conveniences of buying are strong, advertisements, Internet, lifestyles of parents, friends, peers, financial facilities in the form of credit card, debit card, mobile money (using the handphone) and loan, creation and innovation of products and services are making us losing focus of saving our money for the future. With credit cards, on-line banking; cheques and all the conveniences of making payments for our purchases, we are losing our grip with physical money like dollar notes and metal coins! Like the saying goes. “Out of sight, out of mind!” We will soon forget that we have money in our bank as we conveniently spend it away!

Jasmine : How early should we start a financial plan?
Carol Yip: As young as an infant. Take a new business as an analogy. Before starting any business, we have to plan - to incorporate an entity in the form of limited liability company, or a partnership. We need to keep track of company’s expenditures and revenues, and then we need to take the initiative to build the business to make more money for us. We can relate this business set up analogy to our personal lives. As parents, we need to teach our kids to chart their financial path. Share with them a financial vision. Let children know how they grow up to be, will have direct impact on their financial worthiness.

Jasmine: What actually is an education fund? How can it help our children’s future?
Carol Yip: The education fund is money that parents set aside to help their children gain knowledge and be educated in the field they are interested in to make money for their own living. In short, education fund is the parents’ investment in their children with certain risk (can be high or even a loss) depending on the children’s career future.

It is a significant risk for the parents if their children spend this education fund in the field or education that will not be their career. Similar, it will be a bad investment if the children get their education but do not grow up as a fine man or woman, create nothing but trouble for the parents.

Think about it. Besides money put aside for education fees, education fund is also money that is already spent or going to spend, right from the day the parent buys teaching and education aids for their children including toys, story books, video games, play station, computers, cartoon movie tapes and DVD and the list goes on.

As a parent, we must teach and educate our children all the time, right from the time they are little kids, so that they know the values in life, be smart and capable in many disciplines including skills, talent and interest. Is important for the parents to know or understand their children’s interest and passion (including intelligence), the children want to pursue as their career.

Parents should “spread this risk with their children” by sharing this topic with them so they can appreciate what their parents are doing for them. To the parents, work with the children (start from young) to build this education fund, let them know how (communicate with them) you have saved the money, and share with them you difficulties of creating this fund for them, ask them for suggestions how the education fund that you have created for them to be put in good use.

Jasmine: Can you explain more about insurance and saving?
Carol Yip: The purpose of insurance is to protect us and our family if something happen to us. First, we need to know about our policy insurance coverage in details. Not all situations are covered by insurance, for example disease like SARS, bird flu. Insurance is meant for protection, buy only what is required to be protected.

Insurance and savings are two different items. Savings is keeping our money in a safe place and use the money that we have saved for investment, to grow our money. If the investment is not doing well, we can sell and switch our money to a better investment product. Savings is meant to be a life long activity and not depending on the insurable period.

It is advisable to separate both intentions. Use your money smarty buying the right insurance protection and save the rest in an investment product that is specially designed for investment purpose.

Jasmine: Before we end, what is your advice to parents regarding this money management topic?
Carol Yip: Ask yourself as a parent, what is your objective of having a child or becoming a parent? Couples must discuss with each other before taking on the responsibility of becoming a parent.

Money management for a family with children must be part of family planning because money is the part of life. Therefore, it is important for a family with children to prioritise family and life values before money, and not to use money to create love and respect. Respect and love from each other comes from the heart and not what money can buy.

The biggest challenge for the parents is the approach of communicating and teaching their children the good values of money and the best practices. Often parents make money mistakes that the child knows. For the parents, it can be difficult to preach (to the children) what they don’t practice!

Editor’s note:
After one and half hour, I learned a lot about money management and its importance, especially to newlyweds as well as those who are about to have a child soon. Although money management is a small part of life, it plays an important role in our life. Without money management we would perhaps be in a lot of trouble, sooner or later.

The most important thing is to understand ourselves. Create a life philosophy (that is practical to live) and set life and financial goals that are achievable. If once we have this concept, nothing is impossible for us to plan our finances better and more effectively.

"Dig a little deeper into this psychological terrain, and, alas, the financial deck may be stacked beginning in childhood, regardless of gender. The social milieu (culture, family upbringing, religion, races, community, environment) in which people grew up, the early messages they received about money and their individual emotional make up will conspire to define how well they handle money as an adult!"

What are the challenges for students to Smart Money-User?

Carol Yip has a mission to accomplish. Her mission is to combine her academic achievements in finance and her passion for psychology, to promote smart money spending, saving and investments to young adults!

To begin with, she provides solution to lack of money skills education in our tertiary education system by creating the Smart Money-User program for students. This program teaches and coaches students the important money skills and financial tools that are not taught in school, college and university.

Besides running Smart Money-User program, she has also written her first book, entitled "Smart Money-User". This book, aimed at bolstering good money habits in young adults, can be found at all leading bookstores in Malaysia.

To enhance her profession skills, Carol is currently pursuing her Masters in Counseling (Psychology), specialising in financial coaching, counseling and psychology to empower people to be smart money-user and not being “financially victimized” by environment, people and situation.

Remember the days of simple life without Game Boy, Sega Genesis, Nintendo, PlayStation and Xbox, students in school were having fun playing Monopoly, Scrabble, Snake and Ladder board game?

Lifestyle for kids these days are influenced by temptation and desires created by the advertisement & promotion, media, movies, music, magazines, TV shows, pop stars, fashion, Internet and digital devices. How do such influences affect our children towards the value of money?

Such stimulus causes them to value money less by exchanging it with fun, pleasure, excitement, self-esteem and confidence, relationship and friendship.

One can buy and sell almost everything and anything or enjoy entertainment all day long over the Internet. It is “The World that never sleeps” for people to shop, gamble, watch movies, listen to music, make friends and the list goes on. It makes one feels that the computer is a “fun machine” to make money and for enjoyment.

Parents provide material things like iPods, DoPods, MP3, Portables, MP4, mobile phones, Pocket PCs, Palm devices, computers and extra-curricular activities for their children are facing increasing pressure to “keep up with the Joneses”. Feeling guilty not able to spend time with children may be a reason for such provision.

Besides prevalence of "extracurriculars" and expensive lifestyle, parents also get stressed up to provide their children an education, with a hope that their children will get a good job to earn a living.

Financial institutions are not teaching people to be money-wise by creating convenience to get "invisible money" to spend. It is almost “free money” with easy approval of credit cards, loan facilities, debit cards and mobile money (using mobile phone to make credit purchase). Money is no longer “physical”.

For kids who are having debit card or using parent’s supplement credit card to splurge on friends or shopping, will they grow up spending wisely or lavishly?

It is also challenging to parents when children today are living in the “World of Creative Entrepreneurs and Innovative Technopreneurs” of different cultural and social experiences, fads, crazes, and manias, due to Internet, digital technology and media influences.

Heard of teenagers voting for their idols in the American Idol or Malaysian Idol TV show, using their mobile phones, spending hundreds of dollar to cast their votes?

Even though our children these days are growing up much faster and getting matured in early age, the society is growing up even faster in this K-economy with young adults (born in the 80s and 90s) of Generation Y becoming bold, ambitious, innovative and want to break the mould to do things differently from the Generation X

With the speed of developments in science and technology, today’s children are going to find it difficult to survive tomorrow unless they are highly intelligent or incredibly creative.

They may need to stand out in the community, society and workforce. If it is just an ordinary Joe, then it best to live an ordinary life and not pretend to have money to impress others or to fulfill some personal desires, temptation, fantasies or dreams.

Heard of students selling home-made CDs of songs, games or movie download from Internet or made by using simple electronic and digital devices at home? And students create website that sells just about anything one can think of over the Internet?

How about students selling their mobile phone credits in exchange for cash? Or selling their computer games score for cash to friend is not able get high score of the same game?

It is becoming serious problem where teenagers running away from home or school to make money because they have been influenced by others or because someone promised them a good future with money and luxury in life.

Therefore, instilling good money values to children is important. And these values go beyond just having lots of money. Besides family and life values, children must learn that money should only be earned through honest means, should never be used to manipulate, as a crutch or weapon, and that it should never be used to measure one’s self-worth.

Many people are being “victimized” by money. Money is only a medium of exchange for living and survival, yet it is often overlooked at home and in school. It becomes medium of exchange for relationship, friendship, happiness, luxury, enjoyment, power and status.

Many children attend life skills workshop like leadership and classes like music, art and dance, to learn a skill may be used to earn future income. At least, they have a choice to pursue their interest or passion to make money.

But do they have ideas what to do with money when it finally arrives? To keep it? Or to spend it? Some who are borne a natural saver or stingy, they will keep the money. One wonders if it is a skill or habit they learn from school or from parents or is part of family genes?

How to invest money wisely? Is this investment skill born with or learnt from parents, schools or friends?

Psychologist would say that a child’s early years are the most important years that shaped behaviour and habits. The financial deck may be stacked beginning in childhood, regardless of gender.

The child’s upbringing and social environment in which the child grow up, the early messages received about money and the emotional make up will conspire to define how well he or she handle money as an adult, to be financially successful or broke.

Ideally, the child’s financial education starts at home but there are parents who still either shrug off that responsibility or postpone it until “the child is old enough” to understand. Unfortunately, it may be too late.

Probably, being a parent is even more difficulty to teach own children about money when kids get to see and experience how parent treats money.

Can parents stop their kid from spending their pocket money when they personally like spending money?

If there is severe lack of financial education at home, today’s teenager is forced to build financial knowledge from various sources and personal experience with friends, peers and people they mix with.

Most of the time, is through trial and error or maybe after many painful and difficult experiences. But what is worrying is our brain tends to store bad experiences as memory better than the good ones. Think about it, do you recall your bad financial experience easier compared the last time you were feeling happy about your money?

Do our children get to learn how to be smart in using money in school? Colleges and universities offer degrees that teach the students to become a professional or business person to earn money but not how to be money-wise.

Don’t you think time is now for the schools, college and university to consider having a subject on “Money”, teaching the students money skills, besides giving teaching them to be good academically?

I am a believer in saving the $M1,000 if a person doesn't have outstanding bills or debts like credit cards, personal loan, property loan or even as simple as money owing to people like friends, relatives and family members.

Whether is a young adult who just started work, newly married couple, family with children or retirees, saving habit need to be cultivated (for those who already lost the savings habit or feeling, then it is time to get the habit back) because in the society we are living these days, spending becomes our biggest enermy. We can't live a day not spending our money. It is as simple as eating a meal!

Saving is an important behaviour that needs to be "rekindled". Nowadays, $1,000 is actually not a lot of money, a person can just spend it easily. But to earn the $1,000 is hardship... so why, think of giving away the $1,000 so easily.

One may consider investing the $1,000 which is a good idea. But how about challenging oneself to save the $1,000?

Though many may think that bank interest is not attractive but this habit of savings money is the bank is an action that a person need to have because by accumulating more cash in the bank, you can then convert the large sum of cash to investment that can give a more attractive return.

This is how your money will grow... CASH IS KING! Why? Because with cash, you have negotiation power!

Many people may have lost the essence of SAVING MONEY habit... why? Simply because, many use money to achieve desires or satisfaction.

How about just keeping the money in a savings account, or even in a money box or piggy bank, can the person leave the money alone? I often hear that "Cannot save money, just feel like spending it" or "I will spend it eventually".

For most of us, money and our feelings towards money are not static, but fluid, dynamic and intense. We know so little about why we experience these emotions towards money and the effects they have on our very existence. Not only do we have a physical self, an emotional self and a spiritual self, but we also have a "money self".

What is Money Self... is a SELF that is stingy, generous, gambler, spendthift, thirfty... And most of us can related that even siblings will fight and argue over money. That's what I mean by money self! It is almost like you are seeing a different person at times!

So, why does a person's behaviour and personality change when money is involved?

Our psychological money self is an integral part of our behaviour, thoughts and emotions, and these factors influence the way we deal with our money.

In other words, a person's financial personality is a major factor in how the person spends, saves and invests his or her money.

If you were to observe each person's "money self " and dig a little deeper into this psychological terrain, the financial deck may be stacked beginning in childhood, regardless of gender.

The social influences within the family upbringing, society and community in which people grew up, the early messages they received about money and their individual emotional make up will conspire to define how well they handle money as an adult! "

Therefore, saving habit has to be cultivated right from young to old! And saving the $1,000 is a good start!

Hi, I am Carol Yip!

Have you ever wondered why money seems to work so well in some people’s lives and so destructively in others? Why some people control money while others allow it to control them?

I do wonder all the time.....

Or why some of us can manage it so effortless to fulfill life’s plans and goals, while others never stop to question how they want it to serve them?

Well, can it be due to luck, faith or we work hard for it!?

Questions like these are not typically explored.

Why not?

I believe it is because the answers do not lie in cold financial facts. One must look at both the financial and psychological factors involved in money matters to make sense of why people do what they do with money.

This is because all of us, biologically, have certain characteristics and personality. Our brain is made up of billions of energy cells and intelligence to function our physical body.

We are brought up in influenced environment where there are social interactions with many kinds of people. Our behavior, thoughts and emotions, are therefore, influenced over time as we age.

The way we think, the way we feel and the actions that we take relates to the relationship we have with ourselves, that have direct or indirect implications or effects on our money.

In short, the money that we have and our feelings towards money are not static, but fluid, dynamic and intense. And yet, we know so little about why we experience these emotions towards money and the effects they have on our very existence in our daily lives.

Our psychological money self is an integral part of our behavior and influences the way we manage our money. In other words, your financial personality is a major factor in how you utilize or save your money.

Not only do we have a physical self, an emotional self and a social self, but we also have a financial or money self.

Because I believe in financial psychology of human behavior, I have created this blog to share and learn about the psychological aspects of human beings and how money becomes the end result of people's behaviour, habits and actions.

Many of us have fixed beliefs, past experiences, upbringing and encounters that cause our actions... somehow, in any actions that we take, there is relationship towards money.

In a way, we have this area of psychology called MONEY PSYCHOLOGY.

When money is oncerned, personality of the person can change totally......... the person can be greedy, thrifty, spendthrift, a "gambler instinct", "power hungery", stingy, betray friends, cheat on others and the list goes on...

Why is that so?

Do you know why?

Well, I welcome comments and share of experiences from you... please post your comments... :-)
Check out my website www.AbacusForMoney.com

I give talks on "Understanding Your Financial Behaviour". Some testimonials of my talk...

"Carol’s talk goes deep and draws out the awareness and realization in understanding our financial behaviour. This awareness and realization is the first step to good money management for financial freedom. Carol, keep up the great work! Your transfer of knowledge to our society is priceless!"~ Tan Sai Hup, Assistant Director TEC ~

"It was our great pleasure having you as the Speaker for our evening talk entitled "Understand Your Financial Behaviour". We would like to express our gratitude for your sharing session with us and our audience.

The majority of our audience found the content of your talk was very informative, easily understood and well presented. They have commented that the talk had helped them to understand their financial "behaviour".~Yeap Teik BuManager of Centre for Continuing Professional EducationTunku Abdul Rahman College~

"As this was my first attendance at Carol Yip's presentation, I must say I was impressed with her smooth ease and fluent delivery ... simple step-by-step powerful principles, financial plans and skills anyone can easily adopt and manage finance, followed by exercise application in real-life situations.

This is a must learn and apply money savvy for a promising future of money management, specially designed for adults who want to asses their money skills, manage money and achieve financial goals, freedom and independence.

Make a friend out of a financial coach with delightful Carol Yip who can safely guide you to money action plan which will effectively work for you! Keep up the good work, Carol!" ~ Anthony T.K.Lim ~Training Consultant/CoachToastmasters Area P1 Governor, 2006-2007(for Toastmasters Clubs MIM, TelekomScope International/Standard Chartered Bank and Satu Hati)

More testimonials.... http://www.abacusformoney.com/testimonials.htm

Check out more about my workshops at http://www.abacusformoney.com/keynotes.htm#Understanding