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Money Management for Kids
Money Management for Kids

 

Since money management is not taught in schools, most kids learn about it from their parents. It is entirely natural for you as a parent to want the best for your kids, including a life free from the financial stress that often comes with adulthood.

A study at Cambridge University found that money habits are formed by the age of 7.

These findings indicate that we are profoundly affected by our early childhood experiences, and how we saw our parents handle money.

By setting healthy examples and providing our kids with foundational knowledge concerning money management, we will give them a much higher chance of financial stability in the future.

One of the most straightforward ways to do this is simply to tell your kids about how important money is, not in terms of creating happiness, but in its capacity to provide options and to open doors.

 

 

Money Management for Younger Kids (3-10 years)

 

For younger kids, you can introduce the distinction between saving and spending in some relatively straightforward ways.

We all know that age-old tradition of giving children a piggy bank, but did you know that this may not be the most encouraging tool to get your kids saving?

Research suggest that providing your kids with a jar, as an alternative to the piggy bank, is much more effective. This is because they can actually see their money growing, so they are less likely to cave in and want to spend what they have.

It may not be wise to simply give your kids money to put in their jar. Instead, the concept of earning can be taught early on, through encouraging the completion of chores in exchange for pocket money- for very young kids, this can be as simple as putting toys away!

Finally, it is important to not only tell, but to show your kids that things cost money. When they have saved up their change, let them spend it on what they want. Assist them in bringing their money to a shop, and also in physically handing the money to the cashier themselves. This interactive experience will teach them more than any 5 minute lecture ever will…

To go further, you can teach your kids the concept of monetary value. If they want something and they don’t have enough money, let them know that they can either buy something cheaper, or save up a while longer until they can afford the thing they desire. After this, your kids will be equipped with a thorough recognition that some things are more expensive than others.

 

 

Money Management for Older Kids/Teens (11-17 Years)

 

As your kids grow older, your guidance in money management should grow alongside them.

It can be a valuable endeavour to instil the notion of contentment into our kids, teaching them that there is more valuable things in life than material possessions. In the age of social media, it is more common than ever for our kids to compare themselves to their friends online, even to complete strangers! This can lead to an unhealthy element of competition in our kids (I’m sure we’ve all heard the sentence, “it’s not fair that so and so has a much cooler such and such than I do”, or something along those lines). By teaching our kids the importance of gratitude and contentment over mindless consumerism, they are bound to grow into more financially stable, well-rounded individuals.

For teens, assisting them in choosing and setting up their first bank account is very helpfully in helping them to transition into the financial realities of adulthood. You could then substitute physical pocket money for a direct debit/conditional transfer agreement to their account. You may also want to encourage them to get a part-time job alongside their studies and start making their own money.

 

 

A message from Gow & Partners

 

However you choose to educate your kids about money management is entirely your prerogative, but we do hope that this blog article has helped in sparking some valuable ideas!