Teaching the Basics of Money Management to Children
The best period to teach children about money management is between 7 and 10. Children have the ability to easily grasp financial basics when taught tat an early age. This is because the sooner they learn the ropes of managing their money, the earlier they will learn to use it.
The first step is to allocate a meager amount which needs to be given to the child after one week. Assign suitable odd jobs around the house which they can complete in a short period. Once the assigned job has been completed pay them their allowance in full. This way, the child realizes the value of his/her work and will want 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.
The first lesson that they learn here is ‘Savings’. This can be taught by giving them a transparent box or jar into which they pool in their savings. Visualizing the savings grow has a positive effect on them; similar to, when they see sprouts from the seeds they’ve sown with their tiny hands.
Teach children to give away charity money to church or some old-age or children home. This will show they how blessed they are and instill values like humbleness and simple living in them.
Simple lessons on savings will teach them to be more responsible with their money and prevent them from falling into debt traps in the future. Now that the teachings are finally over, let them enjoy their hard earned money.
As a parent, opt for budget planning software offered by personal budget planning websites which you could demonstrate to your kid 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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