Money management is not just for adults – kids who are taught the value of dollars early on grow up to become good money managers and usually don’t have debt issues.
As a responsible adult, you must sit with your kids and teach them the rights and wrongs as far as money is concerned. For this, you have to be a financially responsible adult yourself and try to set an example for your kids. Children are highly impressionable and you should use the opportunity to introduce the concept of cash generation and spending so that they go on to make good financial decisions when they become adults.
If you are a parent of a six or seven year old, you can start with the basics. Teach you kids to count money, pay bills and collect change correctly. Take them along to your local grocery store and make them count the change. It will also help them in their Math lessons!
Inculcate the habit of saving in your kids. Show them how you save a portion of income and set it aside for emergencies. Ask them to maintain a piggy bank and save their allowance and money given to them by uncles, aunts or grandparents. Allow them to occasionally spend some money on ice creams and toys. You can also get them excited about keeping every penny they find lying around in the house, under couch cushions or in the laundry room.
You can teach your older kids how to open a savings account. Teach them to fill up forms and explain the concept of capital and interest to them. You should also explain to them what debt is and what it means to owe money to people and banks.
Advise them against spending foolishly. With so much consumerism and suggestive advertisements, it is natural that your kid will demand the latest video game that his or her friend recently bought. Be open to him about what you can afford and what you cannot.
You can also pay them small amounts of cash for doing odd jobs around the house, like mowing the lawn or cleaning the attic. Encourage them to take outside jobs for others like dog-walking or newspaper delivery, which will make them street smart. Finally, you should teach them to share money with siblings and donate to charities. This will contribute to their all-round development.