Money Matters, Simplified.
6 Ways to Teach Money Management to Kids
The sooner your child knows money management, the better. Here's how to teach him just that.
Mon, 07/20/2009 - 16:00 by Jaspreet Virk
Explain to kids that people set goals and save money for items they want to purchase. A saving technique could involve a piggy bank, an empty peanut butter jar etc “Money does not grow on trees,” is a standard response used often to curb extravagance in children. You might think it serves the purpose. Think again. There are more constructive ways to teach your child the value of money.
4 Easy Jobs for Kids
1. Babysitting: Your child can easily earn money by babysitting your neighbor’s children. Red Cross offers classes for 1 to 15-year-olds to teach them babysitting.
2. Petsitting: The job may involve feeding the neighbor’s pet few times a day when they are out for work.
3. Lawn Mowing: This can be a great outdoor activity for children when homeowners are out on vacation and want someone to mow their lawn. This could also involve planting flowers.
4. Working in Mcdonald’s: And finally, how can we not mention working in fast food joints like McDonald’s. Plenty of jobs like these around. Just make sure that he doesn’t feast, now that they are free, on those burgers too much.
You might think about when and how to teach the money management skills. The ideal time is when they understand what money is. As to how, the following tips might come handy:
1. Discuss Money Frankly
For children, money comes from mom and dad’s pocket and is readily available whenever needed.
Explain to them that money is earned through hard work and can only be spent once earned. Over the years, have frank discussions on how to save, grow and judiciously spend money.
2. Pay Allowances
To help your child understand what being paid on schedule means, give him monthly allowances. This will help him prudently utilize money.
Explain to him the dangers of overspending. If he asks for more allowance, tell him that it is a loan and a certain amount would be deducted as interest on the amount over spent.
Stick to the payment schedule, or the lesson learnt would be lost.
3. Make Saving a Fascinating Experience
Encourage your child to save a portion of whatever they earn or receive.
Explain that people set goals and save money for items they want to purchase. A saving technique could involve a piggy bank, an empty peanut butter jar etc.
As the child learns how to save, pay him small amount as interest just as the bank pays on savings.
4. Encourage the Idea of Maintaining Records
To track spending and to ensure that the allowances that you pay are judiciously utilized, tell your child to maintain records of whatever is saved and spent.
Ensure that he saves every receipt from all purchases and knows where the money is being utilized.
5. Use Real Life Experiences to Teach
Children learn through observation and experience. Whenever you go to the grocery store, use this opportunity to inculcate the importance of planned spending, prioritizing wants over needs and spotting good bargains.
When you pay your bills, show your child the working of the credit card.
6.Encourage Decision-Making
Children want independence. Let your child make his decisions on how to utilize his money.
He might make mistakes in the process but he will learn the lessons well if he is taking his own decisions.
Arming your child with the right outlook and the requisite skills for managing money will help him overcome life’s financial challenges.
