Kids and Money Management

Teaching money management to kids

Money management is one lesson which should be started as early as possible with the kids. Here are few tips for the parents to help them start good.

  • Control your desire to gift your kids:

Do not buy those toys, fancy clothes, and expensive gadgets etc, the things that they do not need or even do not want but though you can afford it or you want to buy it. Save them for Birthdays and important festivals.

  • Regular allowance is a must:

To understand the money matters it is important that they deal with it themselves. Provide them with small weekly/Monthly allowance as per their age. You could even give it to them for helping in chores etc. Allow them to spend it. Discuss with them on how they are planning to spend it. Though you should not take decision on how they should spend it, you must know where they are spending it.

  • Children watch you:

Be aware of the money talks you are doing in front of your children.  Remember – “Children learn more from what we do than what we tell them to do”. If you yourself have no control on your money management then you cannot expect your kids to be exceptional with their money either. Teach them to spend on important things first.

  • Save together:

Save for the things that you as a family need/want (an annual vacation, big car, expensive gadget etc) together. Ask them to put whatever they could save from their allowance in the saving bucket. It might not make a difference to the savings at all but for the kids it does. Appreciate them for doing it. Acknowledge their contribution.

  • Want vs. Need:

The children must know the difference between want and need. This must be learned more as an example than theory. While grocery shopping, let them choose between their wants and needs. Do not give up easily when they choose “Want” and then later fall short on the “Needs”. For example if the kid chooses to buy crayons instead of pencils, do not go and immediately provide them with pencil when they fall short of it. Explain them why it happened and let them live with it for some time. Watch how they manage. That pencil could be so in expensive but the lesson here is so much worth it.

Apart from these it is important to live simply. Many a times when the kids grow up they fail to live up to the lifestyle of what they were living in their parents’ house. This discourages them. The wants feel like needs. Live simply. The fancy clothes and expensive restaurants are good occasionally only. And even if you cannot afford them at all, know that that is even better. The quality of living is not confined in money.