There are many money management tips out there. But what about money management for kids? Teaching your children about money is one of the most important things you can do as a parent. If my child chooses to pursue any career, they will need to know how money works in order to survive and thrive. As a parent, it’s my responsibility to teach money to kids and pass on this skill – the earlier I do it, the more beneficial it becomes. After all, learning about money and how it works is a survival skill in the literal sense because we use money throughout our entire lives. Here are some ideas to get your started.
Start with the definition of money and what it means:
To teach kids the basics of how money works, I start with a few age-appropriate concepts at a very early age. One of those is that you need to earn enough money by doing work that you like in order to buy stuff. And that money is require in exchange for a good or service that you want. To get money, you also need to “work” for it.
Next, teach them about savings:
Although they have not started working to earn money, you can give them small amounts of money every week if they complete their chores or homework. During Birthdays or Festive seasons, give them small amounts to be saved into their piggy bag. Make sure it is physical and real, although most of our money right now are digital and stored in the bank now. Let them understand that with the hard work of saving the money, it may take awhile to save to a substantial before they can use it to buy something nice or something that they want. Do keep count of it once it a while to measure how they are doing.
Help them to understand budgeting:
While they are saving their money, each time they want to buy something, tell them about the price of the item, and make reference to how much they are “earning” and how much they have in their savings. Tell them about the trade offs and how long it took them to save so much, in order to make this purchase, and whether this item is really necessary? Will they still want or need it after that heat of the moment?
To increase to the next level, teach them about investing:
To simply investing, you can simply tell him that for every 10 $1 coins he has, you will give him a $0.10 every month. And after 1 year, he would have gotten another $1 plus 2 $0.10 coins. Put these “interests” into a separate piggy bank and label it interests or investment income. This will help him to understand about delay gratification and the power of using his savings to grow and earn more money so that his savings becomes more and more.
There are many more advance terms that may be interesting and fun to teach your child, let’s touch on that in the next article.