Steps to teach money management to your kids

 

Kids are all about having games, playing games and buying more games. The desire to want something starts at a very early age and kids are considered to be one of the most impulsive buyers. After all, the teenage years are all about school, games and the never-ending requests for money. Some parents find a way to pamper their kids while some parents think otherwise. The problem with kids is they are unable to differentiate between a need and a want. And that leads to Parents putting their feet down whenever kids urge for a purchase.

What Parents have that kids don’t is experience. In their early lives, they must have made some financial decisions that they regretted and wished they could have done differently. The lessons that we learn in the past can be put to use in our present.  Our stringent behavior against impulse buying could be one of such lessons. It doesn’t mean that we do not have the bandwidth to spend, it means teaching kids better values that could lead them to make better financial decisions in the future.

There are a lot of ways kids can be taught money management. The best way to go about it is to start giving them pocket money from an early age. The early you expose them to the financial world, the smarter they will be in the future financially. And who ever said teaching can’t be fun; by blending games with savings, you can literally make your kids save while they enjoy doing it unknowingly. Introducing children to the concept of income, expenditure and savings by giving them pocket money is something that can be done gradually in the early years and in a more structured way of learning as the youngsters grow older.

Kids are the biggest imitators and Parents can benefit from this trait. Kids learn by watching their elders. They tend to imitate your habits because they want to act like grown-ups. If they are exposed to money at an early age, they will try to learn from your spending habits. And this is a good way to instill values in them and making them take financial decisions on small-budget tasks like grocery shopping.

Upon giving the responsibility to handle some minor monetary expenses, kids will certainly make an attempt to clarify their doubts and start questioning about their new financial responsibility. By guiding the children through proper answers will certainly help them learn more about the fiscal world and help them in forming a viewpoint that low debt, high savings and decent investing is the right approach to lead a financially healthy life. However, before handing over the first monetary responsibility to the kids, the parents need to learn about the right direction to follow on the road to financial literacy.

When to Start?

We might think that we should start giving pocket money to our kids at the age of 7-8 years, but in reality, neither it is too early to introduce the youngsters to the world of money, nor there is any perfect age to start teaching them the basic concepts of money management. Even the younger children, including the under-fives, can be made to learn the value of money by providing them smaller allowances and asking them to save for smaller goals. By the time they reach 7 or 8, money management skills might begin to develop automatically. The early the kids learn about the buying power of money, and managing their daily spending and savings accordingly, the more are the chances of them growing up into financially, literate individuals.

Money doesn’t come cheap. It is earned.

As we have stated time and again, Money spent is money gone forever. It isn’t coming back. So, every penny we spend has to be earned first by doing some hard work. The kids should be given responsibilities for some age-appropriate jobs like helping you sort the dishes or arrange the dining table before dinner and should be rewarded with a small amount. This reward function will actually sink in and help them understand that money has to be earned. So that, if they have a goal of buying a video game worth 5000 and if they are getting 50 bucks for each chore, they know that they have to complete 100 chores to fulfill their dream purchase. This instills patience, values and more importantly savings. Buying a video game isn’t savings but saving the money and not spending it for a long period of time until the dream purchase is made does denote a savings habit.

Setting Limits and Rules

It’s not all about savings. If you force them to just keep saving their chore money and not use it at all, you are in for a big trouble. Kids are stubborn and do not like to be forced against their will. While savings could be a good habit to teach, a balance needs to be struck between their needs and yours. You want them to save and they want to spend. Make a spending rule where both of you could benefit. If you are giving them 100 bucks, ask them to make three jars: one for saving, one for spending and one for donating. There is no hardcore ratio of these buckets but you can have 50% for savings, 30% for spending and 20% for donating. You could also ask them to make a wish list of things they want to buy in the near future and ask them to prioritize it according to their taste. They can later create a timeline where they can mention the amount of tasks they have to complete to reach the specified goal figure.

Teaching children the value of money right from their early years helps in inculcating valuable skills of earning, spending and saving the earned income, and establishes utilitarian money habits that accompany them all through the life. All parents need to do is to establish some ground rules, impose some restrictions and keep an eye on the spending to curb impulsive buying.

I know keeping a track of your teen becomes cumbersome and physically impossible. But Slonkit is here to help. Slonkit is a solution created with a sole purpose to cater such needs. All you need to do is download the app and order the card for your kid. You can track your kids’ expenses, set limits and instantly load money whenever they require. Slonkit helps you connect with your kids and virtually be with them all the time.

 

 

By,

Team Slonkit

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