Teaching the Basics of Money Management to Children

Small children are capable of grasping money management skills easily, if they are taught in the right manner. This is because when they learn the skills early, they sooner they will start applying them as they grow older. Children between 7 and 10 need to be taught simple money management skills by their parents.

The best way to start off is by allocating a small amount which your child will be allowed to use for a week. Along with it, assign odd jobs around the house which they can do without hurting themselves. Once the assigned job has been completed pay them their allowance. By doing so, the child will realize the value for his/her work and will also strive to earn more.

The parent now needs to show the child how this money has to be spent wisely. The child should be taught to allocate for three important categories – saving, charity and spending. The parent needs to teach them to split it as 40-10-50 or 50-10-40, whichever looks appropriate to them. By doing so, children give away a small portion for others and give away a small portion for others and importantly, learn to spend their hard earned first salary on their favorite things, and finally, save a portion for themselves for the great job that they’ve done so far.

The first lesson that they learn here is ‘Savings’. This can be taught by giving them a transparent box or jar into which they pool in their savings. Visualizing the savings grow has a positive effect on them; similar to, when they see sprouts from the seeds they’ve sown with their tiny hands.

Charity money can be given away to church or any other children home, where they can see how blessed they are. Such things will instill humbleness and simple living in them.

Simple lessons on savings will teach them to be more responsible with their money and prevent them from falling into debt traps in the future. Now that the teachings are finally over, let them enjoy their hard earned money.

As a parent, use budget planning software offered by personal budget planning sites which you could demonstrate to the child as he grows bigger. This way, you become an ideal parent for your child, giving him financial security at all times.