It is not easy to get
your kids to manage their money, but it is important to teach them to do so at
an early stage, so that when they grow up, they can be financially independent.
1. Begin with a weekly allowance
In
order for kids to learn money management, first they need to have their own
money. So, start them off with a weekly
allowance. Let your kids know what is
worth spending their money on but always leave the final decision to them, so
that they can learn from their mistakes.
In the event that they have spent all their money in the first few days,
don’t give them extra cash. Instead,
make them sandwiches to bring to school, so that they can’t buy anymore goodies
from school. Don’t bail them out or they
will never learn the consequences of reckless spending.
2. Start them young
As soon as they begin to demand for the things they want, it is time for
an allowance. Usually it is around the
age of 4 to 6. Most parents would wait until their children are in their teens.
While they are still young,
take the opportunity to discuss with them about money. They are quick to listen and take advice from
their parents.
3. How much is enough?
Giving
too much cash to your child may not be better for him. Kids don’t know how to
differentiate between a want and a need. They won’t see the reason why they should save
when you can buy them whatever things they want. So, if you decide to give them a big
allowance, tell them that you won’t buy them anything extra. Instead get them to start saving their
allowance for the things that they want.
The satisfaction of getting something after weeks of fighting the urge
to spend gives them a boost in self-confidence and a valuable lesson about
saving money.
4. Working for cash
Some
parents make their children work for some extra allowance by giving them
household chores. I would strongly
advise against this, as then they won’t lift a finger to help you when they
don’t need the money. They should
understand that everyone in the family is expected to contribute their time and
energy.
5. Have a savings account
Set
up a savings account for them. Make sure
they keep their account balance updated every month. It
would give them confidence and satisfaction just seeing the numbers increase.
So, be wise in teaching
your kids about how to manage their money. They will be more aware of the value
of money when they have their own money.
