Money management is an essential life skill and we must introduce it to our children early on.
Summer holiday is an excellent time for children to learn and develop new skills. It is also a great time to cultivate essential life skills such as money management.
Money management affects children throughout their lives. So, why not start early and give them lessons on managing their money smartly? Make the learning interesting for your children by following the simple steps:
Start by giving allowances to them
Children wouldn’t be interested in learning about managing money unless they have their own money to manage. That is the time they will pay attention to your money advices. Hence, start by giving them monthly or weekly allowances. However, ensure that you make them earn the allowances. Maybe, you can give them a small household chore or an errand to run. It’s important to give avenues to children to earn money so that they understand that it isn’t an unlimited resource.
Throw in a challenge
To make the process of learning how to manage money meaningfully, set a realistic goal for your children. Ask them to save a certain percentage of their allowances by the end of a month.
Introduce them to Budgeting
One of the most basic aspect of managing money smartly is to create and maintain a budget. Ask children to document their expenses, help them to create budgets across categories such as food, shopping, books, travel and so on. Budgeting the allowance helps children to analyze expenses, derive insights and learn to manage money better.
Introduce them to opportunity cost
It’s important for children to learn that every spending decision has a consequence. For example if they want to buy a board game, then they might not have the money to buy that pair of shoes. This makes them conscious spenders. They learn to weigh their decisions and not indulge in impulse buying.
Leverage Digital Avenues
As a parent, you must use digital and mobile-based money management solutions to usher your child into smarter money management. These digital avenues enable you to give allowances and emergency cash to children instantly. You can also receive updates on their “expenses” in just a few clicks on your smartphone.
Money management is an essential life skill and we must introduce it to our children early on. The experience of managing money helps them to build financial discipline. It makes their “financial prudence” journey – enriching and enjoyable.
(By Javed Tapia, Founder, Slonkit)