How to Teach Children Money Management
Are you teaching your children how to manage money? I have to say I think I’m failing miserably at this right now. If anything, I’m teaching my children money mismanagement because whatever they ask for, they generally get. I know I should be giving them a healthier perspective, maybe making them do chores to earn pocket money and then teaching them how to spend their hard-earned cash wisely. But I’m not doing this. I need these 5 Lessons on How to Teach Children Money Management. Very grateful for this guest post.
Teaching Children How to Manage Money – TOP 5 Creative Ways
British scientists conducted a study and found out that all human habits connected with handling money are being formed up to seven years. So, if before this age you have not learned how to save, spend, prioritize and set monetary goals, everything is lost. For you – maybe, but not for your children. You need to teach them before it’s too late.
We recommend these 5 simple yet creative ways to teach your child financial literacy. With this training, your child will understand saving and budgeting very quickly.
1. Tell your child about charity
This is hard to believe but by participating in charitable events, you can teach your child to deal with finances. Explain to your kids that even donating 10 cents a day can help a homeless animal or a sick child.
Show your child how Non Profit Organisations work and suggest taking a part in a project together.
For example, you can take custody of an animal from a zoo or donate funds for an organization that protects the environment. In either case, the child will remember this lesson for a long time and will know the value of money.
2. Do not control the child’s money constantly
This was you are definitely not going to teach him saving and spending money independently and wisely. Offer the child to divide their money into two groups – smaller and bigger.
Smaller amounts can be spent on anything – sweets, stickers, sequins and all those little things which are very difficult to pass by when you are a kid.
It is very important not to control everything the child is spending this money on. Get used to the dialogue. Spending money can be discussed, but you do not have a veto. If you are dissatisfied, advise doing otherwise, share your fears but do not prohibit.
It is necessary for the child to catch the connection. With the money that belongs to you, you are free to dispose of as you wish. And if you waste it, you are the one who has to deal with this problem.
We’ll discuss the bigger amounts next…
3. The more you spend, the longer you save
The larger portion of money must be set aside for a specific purpose. This purpose, especially for the first time, should be understandable and practicable.
Do not worry, do not invent, your child probably already knows what he wants to buy.
Now, when the goal is set (bike, game console), help him to get money.
Here it is necessary to show firmness. Don’t go out and buy the thing your child is saving up for.
On the other hand, don’t be angry if the child took money, which had been set aside for the larger purchase and bought an ice cream. This is also an important lesson – the more you spend, the longer it takes to save up for the special item you’re longing for. Explain to the child this is part of saving funds and wait patiently for him to see the process through to the end.
We don’t recommend you to pay for good school marks. “Give me good School results and get 10 dollars” – this method does not work. The child can decide that the assessment in Mathematics is not 10, but as much as 50 dollars.
In addition, such an approach will turn learning into the extraction of quick money, but not knowledge.
Add some cash to the piggy bank just for the big events: the end of the school year or their victory in swimming competitions.
4. Disassemble favourite dishes by ingredients
Thus, your child will understand how much it will cost to cook his favourite cake, salad and any other dish. To speed up their lesson in financial literacy, let them help you make the shopping list and be sure to take the child with you to the supermarket when you buy the ingredients.
In addition, you can make a menu for a week and together with the child calculate the amount of money that you need to buy products. These budgeting skills will be useful for your children in adulthood.
5. Teach a child “prioritizing” and give your own example
Divide your children’s wishes by priorities. Teach the child to plan his expenses.
It is important not only to give children pocket money but also to teach them to spend so that they do not immediately go for sweets and small purchases.
For example, a child has 30 dollars. Tell him that he can buy a small toy for them. But if he waits a month, then you will help him and he can buy a more expensive one. Teach the child the art of waiting and the power of accumulating interest on their money, rather than just spending their money immediately.
He will be able to think ahead of his savings and future purchases.
It’s a great idea to set the example yourself by also saving money for your own big purchases. Show them how you budget, how you wait patiently, save up and hold back on certain things, so they will know how to use all these saving rules practically and see how they work.
Are you teaching these 5 lessons to your children? Do they know how to budget and save? Do you have any special tips you’d like to share? #HowtoTeachChildrenMoneyManagement