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 best way to start off is by allocating a small amount which your child will be allowed to use for a week. Along with it, assign odd jobs around the house which they can do without hurting themselves. Once the assigned job has been completed pay them their allowance. By doing so, the child will realize the value for his/her work and will also strive to earn more.

The parent now needs to show the child how this money has to be spent wisely. The child should be taught to allocate for three important categories – saving, charity and spending. The parent needs to teach them to split it as 40-10-50 or 50-10-40, whichever looks appropriate to them. By doing so, children give away a small portion for others and give away a small portion for others and importantly, learn to spend their hard earned first salary on their favorite things, and finally, save a portion for themselves for the great job that they’ve done so far.

Since savings is primary here, give them a box or jar (a transparent one) where they can see how their savings increases as they work for it. Visualizing the way their savings grow will have a positive effect on the child; 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.

Now that the financial classes are finally over, take them out buy their favorite toy or dress or video game. These small lessons on savings will remind them to be responsible for their actions and will prevent them from falling into debt traps in the future.

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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