Have you ever thought about how interesting it would be if kids did not have to ask you for money all the time, rather, use their own to cater for their necessities? Or even plan ahead of time? This can only happen if you start teaching them about proper money management. Money management is the process of expense tracking, investing, budgeting, banking and evaluating taxes of one’s money. Since kids easily get bored, make the financial lessons fun, age appropriate and part of everyday life.
Below are steps to help kids manage their money appropriately;
Teach children how to compare prices. Compare the prices of two similar items. Discuss why the prices might be different. Explain why you are buying a certain commodity instead of the other.
Make choices about spending the money. Even though your child has saved really much money, explain to them that they can’t spend it all carelessly. They should learn to plan. Let kids know that it is not a must to buy everything they want. Talk to your child that it is better to first buy their needs compared to their wants. A want is a desire for something yet a need is a necessity that you require to survive, for example, water, food, shelter, among others. Instead of spending on chocolate, advise kids to spend on a book or a snack.
Encourage them to save. Teach your child how to save at an early age. Give house chore assignments and pay your pre-schoolers. Let kids participate in doing house chores and pay them whenever they are done. This will enable them to work hard, expecting to be rewarded. They can even do some shopping for themselves through their little savings. Buy for your child a piggy bank where they can save. Monitor their savings.
Open a bank account for them. Go with your child to the bank and open up an account for them. Explain to them that when their money is put in the bank every month, it will increase with time.
Set a good example. Preach what you do. Show an example to your child. Let them be aware that each month, you get a certain percentage off your salary for savings. You don’t need to tell them the exact amount that you save but at least they should be aware that you save. It will motivate them to save more.
Teach kindness. Teach kids to get a portion of their money and give to charity. Make them understand that there are kids who are orphans, without food, shelter and clothes.
Plan for the unexpected. Advise kids to plan for sudden issues that can happen. For example, their bags or shoes can get torn; do not pay all the expenses of such things. Allow a child to contribute even if it is just a coin. This will make them feel responsible.
Set spending limits and respect them. Your child should not exceed a specific amount of money every month while shopping. They should have a plan that they won’t breach. For instance, if they save about Rwf 5,000. They should promise themselves not to spend more than Rwf 2,000 monthly.
Let your child borrow money from you with an interest. Not every time that a child asks for money you have to give it to them easily and freely. Give them loans and let them pay you back with an interest of either 5 per cent or 10 per cent. They will do their best to pay their loan in time. Do not make it easy for kids, they might not learn.