How Can You Teach Children About Responsible Money Management?

There are some ways to teach children about money management at an early age. Most of our children do not learn money management until they become adults.

Because there are generally no courses on this subject in formal schools, there are no helpful personal finance programs on TV, and observed parents often do not trust age-appropriate money management teaching techniques.

Each child’s behavior regarding money is different and many parents have different ideas on this issue. Parents often think that how they get and use money doesn’t mean much to a child. That’s why most parents avoid teaching how to manage money by being emotional.

Unfortunately, this escape prevents children from building the strong foundation they need. Therefore, most children do not have a clear concept of how to manage money.

However, the reasons and importance of constantly changing citizenship values such as taxes, transportation tickets, credit cards, and coupons used in shopping can only be learned by using money.

The best place for children to get information about money is always their families. Therefore, to avoid making bigger mistakes in the future, parents need to teach their children the importance of earning money, saving, and consumption behaviors that should be avoided from a young age. Economists point out the importance of preferences shaped in childhood and ingrained behaviors. 

What Age-Appropriate Money Lessons Can You Start Teaching Kids?

By understanding economics at an early age, childhood experiences are expected to guide adulthood choices. Parents have a huge impact on their children’s experiences, especially during their early development.

For this reason, parents should try to instill appropriate values in their children by giving them regular pocket money at an early age, making a spending plan, encouraging savings, lending money when necessary, and providing opportunities to earn additional money.

The key to teaching children money management is to give them responsibility for managing their own money at an early age, even before school. Allowance, which is the best way to teach money management skills, can be given regularly by parents and used as an educational tool for children.

Children with pocket money learn the benefits as follows:

• Mathematics,
• Planning your expenses,
• Making the right purchasing decisions,
• To obtain the purchases at full value,
• Using limited resources appropriately,
• Saving money and donating to charities

If children don’t get an allowance, parents don’t know what to buy and what to buy.

By deciding what to do, they manage their money for them. However, children should be allowed to learn how to manage their own money.

How Can You Use Allowances To Instill Financial Responsibility In Children?

One of the biggest misconceptions about pocket money is that some parents cannot afford to give their children “extra” money. Looking at pocket money from a different perspective, every parent can afford it. Instead of paying children when they want things, they can be allowed to make spending decisions with their own pocket money. 

In this case, “pocket money” is just a different way of giving any expenditure for the child. In addition, it should be determined how much money children regularly receive and what their responsibilities are for purchasing or saving with their money.

The slow process from having no responsibility for money to being fully responsible for their purchases helps children understand money concepts more easily and allows them to learn money management with minimal frustration. The purpose of this process is to allow the child to understand what it is like to have “his or her own money.”

When making a budget for a child, it should be avoided that the child hates the letter “B”. Therefore, while giving their allowance, they should only be helped to implement their spending plan during the day. While doing this, the child must be aware of where the money comes from and where it goes. Parents can use a list of their expenses when planning. 

What Are Fun And Engaging Ways To Educate Kids About Money Management?

Examples of these spending areas include familiar and customary items such as groceries, gasoline, video rentals, birthday gifts, laundry, and cleaning. It can be explained how some goods and services are needed, and unavoidable, and how gasoline, food, and shelter always cost a similar amount. It can then be explained how other goods are easily desired and how their prices can change with skill. 

For example, it can be shown in practice that choosing an inexpensive birthday gift instead of an expensive one or choosing to watch a video once rather than three times a week, reduces expenses. 

When creating a spending plan, parents should make sure they list everything their child is responsible for fulfilling to eliminate disorganization. A flexible plan should be prepared with small additions for expenses such as school lunches, light meals after school, video rentals, movies, and an unexpected birthday or party invitation.

This additional amount is valuable because of the inevitable surprises and helps the child become informed about his or her choices. When children reach the age of 13-14, their allowance and responsibilities should be increased to prepare them for independence. 

A spending plan can be drafted to help these children in their early adolescence, including some of the more expensive items. Some of these areas of spending include clothing (which can start with just one category, like shoes or accessories), sports equipment, movies, and holiday events. Saving a portion of children’s pocket money also paves the way for their future savings and investment habits.

Can You Share Stories Of Families Who Raised Financially Savvy Kids?

When we look at the childhood periods of more financially successful people, we see that they gained more successful money management awareness during their childhood. The responsibility here is for families to provide education on money management to their children.

How Does Early Financial Education Impact Children’s Future Financial Habits?

The rapid increase in the cost of education in recent years encourages parents to start saving early for their children’s university education. This helps children learn the value of saving for the future and understand that they need to make sacrifices to achieve their high-priced goals. 

Many banks offer free savings accounts for young people with small amounts of money. A bank account is a great way to show kids the power of growing interest. Augmentation works by paying interest on interest.

It may not seem like much, but an investment will grow 100% in approximately 9 years at 8% annual interest. This way, the teenager can keep track of the money’s progress and enjoy the experience of receiving account statements in the mail.

See you in the next post,

Anil UZUN