In today’s fast-changing world, parents have to deal with constantly changing parenting situations. One of the most important things is to teach your child the value of money alongwith other smart money skills. In today’s article, we talk about Money Management For Kids.
Most of the time, we find parents not discussing money matters in front of their children. They try to shield them from information about the source of money, earnings, and other financial investments. The result is that children are clueless about financial decisions and skills which could help them become smart adults with sound financial decision-making abilities.
It is always good to teach children good financial skills early in life so that they have a solid financial knowledge foundation.
Money Management For Kids
- Teach them to save and spend.
It is important to teach children the value of money. Teach them how they can save their pocket money and other financial gifts. Tell them the importance of saving and how to judiciously and appropriately spend those savings.
Give them the gift of a piggy bank early in life. Tell them how they can save, budget and plan. Teach them the art of saving and waiting for the right moment to buy toys or any specific thing that they may want.
Encourage them to value money alongwith moral values. Valuing money broadly means the purchasing power of money and the hard work that goes into earning that money. For e.g. money can buy them an expensive toy but not happiness. Help them to make that distinction early in life. Teach them the philosophy of money.
This will help them to be less materialistic, self-centered and selfish and in turn will teach them to be a blessing to others. Children who are givers early in life become more grateful and happy adults.
You can start by giving them three envelopes, one marked Save, the other marked Spend and the third marked Give. Ensure that they keep something in the Give envelope which can later be used for giving something to the less privileged children.
- Budgeting.
Teaching your child to manage their money at an early age will instill financial discipline. Give them pocket money at an appropriate age and also the freedom to make their own buying decisions.
Keep a watch on their decisions, so that you can advise them appropriately. Teach your child how to maintain monthly debts (outflow) and credits (inflow). Tell them that they should spend only when the need arises. Don’t keep nagging them about the usage of their money and asking for every minute detail, but encourage them to spend wisely.
Encourage them to save for that toy, book or gadget which they want. Teach them to forego the current pleasures for a better gift tomorrow. Give them ideas about how they can budget and spend their monthly pocket money appropriately.
- Talk to them about the invisible money.
Most of the time, you have young children coming up to you and asking you to remove money from the ATM. In the current world, plastic money like credit cards, debit cards, paytm, online shopping etc., make it difficult for a child to understand the value of money.
They might feel that there is an unlimited source of money which can be accessed by everyone, anytime. It is important to talk to them and make them understand how money is earned and the hard work involved in the process.
When you take them to an ATM, ensure that you explain to them that money comes out from the machine because it is the money from your bank account. It is your hard earned money for which you spend hours at work. When you remove this money from the ATM, obviously there would be less money available for use in the future.
- Explain to them the importance of buying more at a less cost.
You need to explain to them the pricing of different items at the supermarket. Explain to them the difference between the cheaper and the most expensive version of the same product.
Tell them the days of discounts and sale, wherein you can buy more at a less price. You can tell them the different aspects of usage, quality, and branding. Advise them not to pay a premium for brands but to use a cheaper option that provides almost the same features and product usage. Explain to them the price difference and the saving aspect.
- Making your money increase and grow through wise decisions.
At an appropriate age say 10 years and above, you can explain to them about increasing their savings by investing in different options. Instead of keeping the money in the piggy bank, you can encourage them to open a minor savings account or a PPF account, wherein their money will grow.
Clearly explain to them the advantages of making small investment decisions, which will grow and increase their money.
- Teach them about frauds.
Teach your child to calculate the exact money while buying things. They should be able to calculate and take back the balance amount after buying things. Teach them to buy small groceries by giving them money and asking them to bring back the balance money. This will give them self-confidence, increase their mathematical capabilities and they will become well informed against cheating. If your children are good at maths, then they will easily find out the difference and it will be difficult for anyone to cheat them.
- Teach your child the art of giving.
As the Bible clearly says, it is more blessed to give than to receive. You can encourage your teenager or youngster to work part-time or to have a juice or snack stall in your community gathering and then use the proceeds earned for a charitable cause that is close to their heart.This will help them understand the powerful impact that money can do in changing the lives of others.
- Make a chores list and pay them accordingly.
You can give them a daily or weekly task of helping around the house like watering the garden, mowing the grass, clearing garbage, cleaning the house, cleaning the fridge etc. All these household chores can give them extra money and at the same time teach them a life lesson of dignity and value for labour.
Some easy money saving skills are listed below –
Children below 5 years
- Teach them the importance and also the difference between coins and rupees.
- You earn because you work hard.
- You cannot get everything that you want.
Children above 5 years till teenagers
- Make your own budget which includes your spending, saving and giving.
- Work for getting things that you want and focus on getting only one thing at a time.
- Check out the best and cheapest options.
- Wait for season discounts and sales.
- Better to use cash than credit.
- Keep an emergency fund.
- Do not overspend over your budget.
- Let your requirements be need-based rather than wants.
- Work for the money you want to spend.
- Be a giver and bless the less privileged around you.
These are the top 8 tips to develop smart money skills for children. You can start the process with your children and slowly you will the results of financial discipline in their life.
Hope you enjoyed reading this article on Money Management For Kids. Please read our articles How to Avoid Toy Overload this Christmas
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