When you give your kids money how do they spend it? Wise money habits and the ability to control money starts early in life. It is rather difficult for adults to unlearn all the bad money habits we acquired over the years. Teaching kids about money as soon as they learn to count will help them develop discipline and the ability to control money and not the other way around.
1. Basics of budgeting – give children a fixed allowance every day. Guide your child on how they spend their allowance to help them develop a wise spending habit. At the end of the day ask them how they spent their money and compliment them if they spent wisely. If they haven’t been prudent in their spending, explain why they should not spend on some things but don’t scold.
2. Importance of saving – Encourage children to save by giving them a certain percentage of money on the amount they save every day. Say you give him 50% of whatever he saves so if he saves $10 from his allowance, you give him an additional $5.00. This money should not be spent but goes to a piggy bank. If he wants to buy something, encourage him to delay gratification by allowing him to buy only if he use money from his savings.
3. Record-keeping – teach him to keep tract of his money by recording the amount that goes to the piggy bank. This way, if he is saving for something, he knows how far he is towards his goal.
4. Frugal lifestyle – a simple bringing of lunch to school can be a good way of teaching kids frugality. Make use of his old bag if it’s still in good condition. Kids would always ask for new things every opening of classes but the danger there is that he will not give value to old stuff that are still usable.
5. Starting a business – some kids learn to start a business at a young age. Some would sell stickers, cards or even food. However, do not push kids to do the same. If you see your kids are keen to start a business, encourage and teach them.
You don’t want your kids doing the same bad money habits you do. Your guidance as parents will greatly help your kids develop good money habits. As with bad habits, wise money habits also last a lifetime.