Daily Lesson from Life 17 March 2009

"Tue, Mar 17, 2009 my paper - Clueless about managing money

THEY may be young, educated and tech-savvy, but a significant number of tertiary students here are next to clueless about managing their finances.


Nearly nine in 10 have no idea what a credit report is. The report gives details of a person's credit history, including loans.

The parents of almost three in five students did not speak to them about the responsibilities pertaining to, or anything related to, having credit cards.


These revelations were the result of a study of 600 students between 18 and 25 from 10 tertiary institutions here. It was conducted last November by final-year students from Nanyang Technological University (NTU).

The survey was part of a nationwide credit-education campaign for tertiary students by NTU and Citibank.


Citibank vice-president and business director of credit payment products John Denhof said the findings could be explained by past restrictions on issuing credit cards.

Under the Banking Act, banks cannot issue credit cards to people who earn less than $30,000 a year.


"Many students would get supplementary credit cards from their parents and did not have to apply for cards themselves. So parents might have felt less need to educate their children on credit cards," he said.

However, in 2007, such restrictions were eased. Banks can issue credit cards with a monthly credit limit of $500, regardless of income."

A quick one before I turn in! Knowing finance is a personal education that everyone must have after secondary four if they are still in school. For those that quit school earlier and started work, they need to know more about personal finance and responsibilities even earlier.

Lessons for me:

1. managing your personal finance well will free you from a lot of stress as you start work if you start early!;

2. the mess that a lot of people find themselves has a common denominator. That is: too much debts! Credit card debts can pile up faster than you can blink your eyes if you are not careful! The REAL interest cost can be as high as 24% per year!;

3. for those who depend on their parents to provide finances, they need to take responsibilities to learn about fiscal responsibility if their parents do not provide the lessons! For the parents, you simply have to help the kids learn about saving and spending responsibly. It got to start young!

I wish all young people best of luck as they make their 1st buck and decide what to use with it - how much to save and how much to spend and how much to invest!

Learning personal finance is one of the surviving skills of a leader too! ;-)