Teaching Money Management to Children
Children can grasp good money management skills at early age, if it is taught in the right way. The sooner they learn the ropes of managing their money, the faster they will learn to use it wisely. The earliest age to do is between 7 and 10, because that is when they will start to learn basic money matters in school too.
The best way to start off is by allocating a small amount which your child will be allowed to use for a week. Along with it, assign odd jobs around the house which they can do without hurting themselves. Once the assigned job has been completed pay them their allowance. By doing so, the child will realize the value for his/her work and will also strive to earn more.
The second step is to show the child to spend his money frugally. The salary must be allocated to three categories - saving, charity and spending. Apportion the money as 40-10-50 or 50-10-40, whichever is suitable. Now the child learns the basics of: spending the money on favorite things, giving away a part of it to charity and finally, to save a portion of it for themselves. These simple lessons when learnt the hard way, will stay with them forever.
Visualizing a savings jar getting filled up will show how they reap benefits from their hard work; similar to, how they feel when they see sprouts from the seeds they’ve sown with their tiny hands. Give the child a transparent box or jar where they can put in their savings amount every week.
Values like humbleness and simple living can be taught through charity. Take children to some old-age home or orphanage so they will realize how blessed they are.
Now that the financial classes are finally over, take them out buy their favorite toy or dress or video game. These small lessons on savings will remind them to be responsible for their actions and will prevent them from falling into debt traps in the future.
As a parent, use budget planning software offered by personal budget planning sites which you could demonstrate to the child as he grows bigger. This way, you become an ideal parent for your child, giving him financial security at all times.
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