It can be challenging to explain to children why their every whim can’t be fulfilled. Parents should know how to talk to their children about money management. It isn’t the most exciting thing to discuss by both parents and children. However, this will be worth it, because it is an important life skill. Parents should prepare children for their adult life and children should become well accustomed to money skill.
1. Give children a piggy bank:
Piggy banks can be like a toy and kids often jingle them around. It is the easiest way to introduce children to the concept of saving money. It is important that piggy banks are unbreakable and can’t be easily forced open by children. The traditional ceramic piggy banks won’t work, because in many cases, they will simply shatter in the presence of active children. Plastic piggy banks can be torn open every two or three years after they are full. This will be the moment children won’t forget.
2. Teach them how to count money:
In many cases, teaching children to count money isn’t all that difficult, especially if they already have interest with money. If you want to make children understand about money, then they should be good at numbers. Parents can play with children by setting up make-believe shops, with items that can be bought with real coins or monopoly money. Parents and children can switch roles, whether as buyers or sellers. It is better to let children decide how much each item costs.
3. Give an allowance:
It’s not easy task to teach children about actual money skill, if they don’t have any money to begin with. In this case, you should consider giving children an allowance to give them a chance to manage money. A common way is by giving your child a few dollars after doing chores. It doesn’t stop right there. You also need to lay out the rules and parents should monitor how money is used.
4. Give older children savings accounts:
Bank account is an essential part in any money management strategy. This is replacement for piggy banks that are given to the younger children. Older children have bigger allowance, so they can deposit more money and savings accounts as needed. Parents should set a target amount of savings that children need to achieve at specific date.
5. Teach them basic budgeting skill:
Children should be taught on how to perform basic budgeting skill. Explain the basic concepts, such as income and expenses. As children get older, they should also be taught more complex components of budgeting, such as assets and liabilities. As children get their first allowance, they can start making a basic budget table, consisted only of income and expenses, with a few columns.
6. Let them observe you:
Children often learn about something through observing what their parents do. So, it is important for parents to have proper budget and this could show children how to deal with the real thing. Children could observe how family budget is created and implemented.