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Teach Your Children to Be Money Savvy

by on 15/05/2013 4705

 “Mum, I want to this latest version of Ironman robot. I’ll go to Dad if you don’t want to buy it for me.”

You may blame the Ironman fever for causing your child to haunt you this way (Things may get worse if you don’t even bring them to catch the movie!) However, is there really nothing you can do to make something out of your child’s demand, if any at all?

Well, there is one lesson that you certainly can teach your child- money talk.

Money talk starts from young

Money sense may sound simple, and sometimes it is easily neglected during parenting; nonetheless, it’s definitely prerequisite for child to pick up the money sense since young so that he can manage his money better in the future.

“So many families are very tight lipped when it comes to money and money management,” said the author of <Money Savvy Kids>, Gordon Pape. “So the kids grow up, as I did, kind of in a world of ignorance.”

According to him, all it takes for parents to instil money sense in child is a matter of honestly answering their questions. Child can learn it while they are growing up, and before any undesirable consequence befall on them. 

Interactive Money Activities

Child learns through fun. So, for them to learn about money, you have to teach them through fun ways, be it through practical experience, books or games.

If you are familiar with envelope budgeting system for your own money, this can also work for children. On either envelopes or jars, you can have your child draw pictures of what he or she wants. This will help them to understand certain items take them longer time to save for. You can teach your child to set aside money for daily spending, short-term and long-term goals. For example, there may be a picture of Ironman toy on the short-term container, while the long-term container may have a picture of a trip to Legoland. So, teach your child to set aside money for short-term and long-term goals, and have another container or envelope for spending on everyday items.

Besides, there are also some books which are particularly good at teaching money lessons. The Lemonade War, for example, is about siblings opening up a stand, but includes business concepts and math problems.

Certain board games such as Monopoly definitely make good choice of game to teach your child to learn about Money. As or younger kids, it’s also possible to play basic games including coin recognition, starting at the age of 5.  

Help Child to Learn Saving 

Believe me, reward speaks louder than thousands of words! Start the saving habit in your child by helping them to open a high yield savings account. Currently there are quite many local banks such as Hong Leong Bank that encourage child’s saving habit by offering lucrative interest based on the amount of money saved. Show your child the interest that he gains- and you can give them the rewards by allowing them to buy the things they like. This helps them to appreciate saving much better.

Apart from spending on what the child needs with his saving, he needs to learn to allocate a portion of his saving for charity as well. As parent, you can make it mandatory for him to donate some to a charity, but allow them to decide what charity it should go to. If he doesn’t know a thing about the charity, it will appropriate to open his eyes to the organizations around, such as autism centre, orphanage, old folk’s home and etc.

It’s important for kids to understand that money isn’t just about what you can get for yourself; sharing’s a big part of it. Such is the fact that child has to realise.

Guide Child through Mistakes

Sometimes the best lesson comes from a poor decision, especially when your child is young and at least the financial loss won’t be so great.

For instance, initially when child learns about managing his money, he may spend money without thinking. By the time he has spent most of it, then he will realize that he no longer has enough money to buy the toys he wants. He will regret for not thinking thrice before he spent then. You’ll need to comfort and educate him about how to handle the hard feelings he has after doing the mistake. Guide him to use better way to avoid the same mistake- save up for the things he really wants and think before he spends.

To prepare your child for financial responsibility and a secure future, you have to start from yourself. Things won’t go very far if you don’t “practice what you preach” and save for the future yourself, as your child will emulate the habits he observes in you during childhood. So, act how you want your children to act when they grow up.