Every child adopt attitude towards spending as per family norms, friends at school and neighborhood and definitely the social class they belong to. Children who know how to manage money in good way will surely be an adult with sound financial decisions and a person with stable position.
Parents, through mutual efforts can make their children learn about affordable spending and an appropriate balance of saving .If I recall my own childhood, I saw my father and mother giving us target to save pocket money monthly and we among sibling felt this a source of inspiration when any one of us use to get more score at month end.
Money management skills are those skills which dominates an individual through his life events whether at school, office or business.
How children can be made educated about money value and its calculation and through this how quickly they can learn to manage their cash and go with a definite budget for their weekly or monthly expense.
We can think about few tips to make children learn about budget:
In early age of 5, one kid must be taught by parents to recognize coins and notes, how to pay the price of an item like a chocolate or a toy.
A child must know how to pay $5 and get the balance back if he is given with note of $10.
Children over the age of 5 years must be given a limit to spend money by paying a specific amount of pocket money for week and allow him to manage his spending within limits. Give them creative ideas to do household work, within their capacity, to earn money. Being rich is charming for adults and children equally.
Over 11 year, take your children on shopping visit, teach them to compare prices of different shops and pay a comparative cost for the best quality item. They should be shown with wise examples of buying and make them realize the importance of successful financial decision makers.
At the age of high school, they need to be more independent in paying finances as fee and other activity.
Guide them to open their own saving account and guide them how they can add in to this money by earning interest. How to use credit card limits and save them from loan interest.
At the age of 20 they would be needing finance for car and showing their high needs for social upbringing. Being wise they should use their saving for this.
It is not a good practice to give additional money when children’s overspend. They might learn through practice about the importance of setting limits on spending and making reasonable choices.
Consider loaning with charges of interest, if they want or need of an advance. However, the child will learn that borrowing money is very expensive
When a parent is too quick to bail a child out of financial distress, the child would not learn consequences of over spending.
Young people who have money management skills are more likely to be able to handle adult financial decisions such as buying insurance, using credit card wisely, taxes, financing as well as saving for the retirement plans. Teachers and parents who boost better financial skills are helping young people avoid potential financial problems as adults.
It is never too early for kids and teens to learn how to budget manage. On the other hand, creating the budget as well as understanding process of budgeting helps kids and teens learn the value of money and create a plan for spending and saving their money wisely. Same as helping with and talk regarding the household budget can help them understand the decisions parents make and why they cannot have the latest video game system or buy a new outfit every time they head to store. However, the result of talking about the budgeting, children as well as teens become extra ordinary mindful of their own financial resources and develop the skills to help them make sound financial decisions when they get older.