Just the way we need to teach our kids about every other aspect of life, we do need teach money management for kids.
Know why learning about money is important for kids, how to teach money concept, what makes money grow, what is the power of investment.
Why you should teach your kid about money management ?
1. If you teach children to manage money, they will understand the importance of discipline.
2.Money management for kids can make them more patient.
3.Children who are taught the importance of money, automatically learn to handle things carefully and safely.
4.Your child will become more responsible as you give them the freedom with finance (in a limited way of course) and feel important.
5.Money Management will make their mathematics better.
6.They will become independent faster as they learn the importance of earning and growing money and strive towards it.
7.Your children will care for you more when they know how hard you have to work to earn the money they spend.
8. Read about 5 Reasons why do we need financial planning for your child
Ideas on how you can teach money management for kids
Your child’s age will decide the way you approach teaching your child about finance. This blog will give you some ideas starting with the youngest age possible.
When your child is a toddler
1.When your child is toddler age, say 3 to 5 years she will not understand much about the purpose of money or any such worldly affairs. At the same time, we have to be careful about not getting them to a point where they get “money minded”.
We can just tell children stories about the ancient days barter system and how money generated. What was its basic purpose? How the cards came into place in this century instead of money etc. Give this teaching a form of stories. Make it sound fun and interesting.
This is an age when kids remember stuff all life if they find interesting.
When your child is in junior school
2.When your child surpasses the Toddler age and gets little older say about 6 to 9, Gift her a cute looking piggy bank. Explain the purpose in a very interesting way and that she can buy anything of her choice after a certain tenure when she opens her bank for the first time.
Make sure she understand that it is supposed to be opened after a certain tenure. That gives them a feeling of ownership as well as patience.
Give her small amounts for her good deeds once in a while. Don’t make this a habit but let her look forward to monitory rewards as well sometimes. Teach her how she can invest and save this money.
Once your child is 8 or 9 years, They will understand a lot actually. You can be tricky to teach them investment and show how they can grow money as well.
For example, if you give her 5 bucks for a job done well, tell her she can keep this money with you and if she does all her homework the next week on time and accurately, you will give her 10 bucks next week.
This gives them a feel that money can grow with time, if properly worked on. They also subconsciously get the fact that you need to work hard to earn money.
When your child is in pre-teens
3.If you have a child who is around 10 to 14 years old , you can be little more creative in teaching money management for students. Give them small tasks and let them know that they will be rewarded monetarily. I have seen if you attach the quality and quantity factor to this they get the point clearer.
For example, I tell my son, that if he helps me clean up the kitchen at night I will reward him with a certain amount at the end of the week.
But I keep certain terms to this. For example to earn this amount, he needs to help me regularly for a week and I need to tell him that his work was neat enough and that I accept his standards.
If I find the quality of work not good, he may repeat till the time desired result is achieved.
Make sure you make this activity fun for her as well and for a short while. Children do not have attention span like adults and they loose interest if you ask them to do the same thing everyday.
When your child is a teenager
4.Once your child is a teenager, this is when you actually need to teach him financial discipline seriously. In todays age this is important. Your children can grow your finances or can get them down to zero. Maney management for kids should start at this age sincerely.
Give them responsibilities around the house and ask them to manage finances for small activities. For example they can manage the staff payments or the school expenses or maintain a budget for the small trip that you are going to take next.
These are an essential part of their learning curve.
When I asked my 6th grader to manage finances for a one day trip, I gave him a certain sum of money. We would have to ask him for every spend that we make. I think that made him feel important as well.
Every time he gave us the money he will have to check for balances and see to it that everything can be managed within that sum.
Trust me it was such a fun experience for all of us. We think our babies are just kids but they absorb quite a bit. Though my boy fell short of cash towards the last leg of our trip, but he knew where he went wrong.
The boy himself came to me and said they should not have taken that many rides. This is what took the trip out of budget. I was surprised!! He knew exactly which expenses can be cut short. He never said we could have cut down the gas bill or the food bill etc. Rides is what he said.
Without handling money, he would have never realized this if he did not handle this himself.
He also realized how expensive were the rides. To my surprise he mentioned to me that one particular ride both the kids took were absolutely not worth it and so on….Its really amazing to see my baby grow up so controlled.
Banking is yet another aspect that children must learn while still in your shadow and getting prepared to face the world.
Take them to the bank with you and let him fill the forms and ask you several questions. This way he will get a hang of how banking works.
I think we should do more such activities often and grow out of that “Oh ! My baby can’t get this…let me do that for him” phase….children are more capable than we think them to be…
Tools for teaching children about money
Books are a man’s best friend. They are children’s best friend too…provided good reading habits are maintained.
There are books available which can be good to guide kids about finances. We parents can also find books which can help on how to teach kids about money matters.
You can download an app of your choice depending on the age of your child to teach them about money.
Anyway it is very likely that our child spends some time on gadgets. Instead of playing useless games for hours, let them use these apps to learn something that can go a long way in teaching good financial habits.
Some games like monopoly and business teach them managing finance with fun. There are many more games for various ages that can teach long term and short term financial goals, investments, the value of savings, how expenses should be taken care etc.
Get them a few games like these and make sure you engage yourself in playing them once a week with your kids. I personally find parents involvement in such games needed to explain matters that they might not be still squinted with. So try get sometime out to play such games with them.
Management of household budget
Once your kid is 12+ years, make them responsible to manage certain part of your household budget. Do not forget to sees how they did at the end of the month and advice them how they can better their management skills, how they can save money from the allotted budget if possible and save to invest.
Shopping can teach a few things to a child. Basic mathematics is one of them. I prefer giving my kid money in small changes so that he needs to do some basic math.
Make sure he gets the bill back and you go through. It may be a good idea to give them an add – on card. They should be aware of the entire amount they can spend and till when. This way they learn the concept of plastic money.
If you have a teenager child, ask him to manage all his daily expenses but track it. This way you will gradually teach him to stop depending on you for every small need as well.
Whatever route you take to teach your child just make sure that its fun and not repetitive. Persistence is often a skill that we parents need to learn along with children.
I will have to admit that I myself learnt good financial practices while teaching my son. There are often things that we know but do not practice. But when you teach your child you automatically start practicing,
I started maintaining an excel sheet of my own household budget in a more systematic way after I started handing over some money to my son. I know I need to track him at the end of each week and I better be disciplined myself. Teaching your child is also a great self improvement tool…..thats a mom’s confession!!