Money management for kids is as important as any other skills that children will learn in school. Introducing this to them is a good way to develop your kids’ awareness to handle their own money responsibly and prioritise their spending when they start growing up.
However, it does take time to introduce this new habit to them, especially when they may not be familiar with the function of money and how to use it.
Money Management for Kids: Why It Is Important
As an important life skill teaching kids about money management can set them up with the skills they need for a more secure future.
So, here are three ways to introduce money management for kids.
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Maintain a Piggy Bank
It may sound old school, but it works effectively for kids. Having a piggy bank for themselves allows them to develop their saving habits in a practical and tangible manner.
Ask them to save the money left in their pocket for the day and keep repeating it until the piggy bank is full. Once it is full and they see how much money they have saved so far, they will appreciate the money they saved on their own, more than the money that they simply received from their parents.
Practice Working with a Budget
Budgeting here means giving kids the power to control their own money for a certain period of time.
Let’s say you, as the parent, instead of giving them money every day, give them money for the whole week. You then give them the leeway to control how to spend the money themselves. If they used all the money for that week before the week is over, try to refrain from giving them more money and help them understand that it is the only money they will get for that particular week.
Using this strategy will help them to realise the consequence of spending their money blindly. It will be difficult for them to understand at the start, but once they gain awareness of the importance of managing their own money, they will start to change their habits to spend money wisely.
Modelling Good Money Habits
Kids learn by seeing their surroundings, so if you want to teach money management to kids, start by modelling good financial habits to them.
You can take them with you when you are buying groceries and let them pick from various options of what to buy based on a certain amount of money. Most likely they will just choose whatever they like, but this is where you need to guide their understanding.
Let them know if their decision to buy the things they chose is not a wise one and give an explanation in a simple way, so they understand that there are other things they need to prioritise.
Build Habits from Young
These are three ways in which you can introduce money management for kids. It will be very useful if you teach them from a young age as this will make them appreciate money more and spend money more wisely.
They will also learn to differentiate between things that are supposed to be prioritised compared to others so that they are able to save more money for their own goods.