Each year, middle class children spend hundred of millions of money in pocket money and influence hundreds of millions more in parental and non parental expenditure. And just like adults, these kids have money problems-saving, budgeting, spending and wasting it.Unfortunately, basic money management is rarely taught in school. And at home very few parents discuss money with their children.That
only leaves millions of children at a disadvantage.Many people become adults without any knowing about personal finance. Consequently, adults tend to learn money management by hit and trial method and especially by losing too much money in their adult stage.Kids who do learn about money early will be way ahead of the game.
Just as important learning to deal with money properly will foster discipline, good work habits and self respect. Here are seven ways you can help your children to get a good grasp of how to handle money.
Start with an allowance or “pocket money”:
An allowance also called “pocketmoney” can be a vital tool for teaching kids how to budget, save and make their own decisions. So instead of giving your children money whenever you feel like it, give them a fixed amount at regular intervals.Children remember and learn from their mistakes when their own money is lost or spent foolishly.
How large an allowance or “pocket money” is appropriate?
Experts say their is no right amount. But the actual amount is differed from family to family and between different age groups.To set an appropriate allowance for your child, work up a weekly or fortnightly budget. Children, especially younger ones may find a monthly allowance to much to handle. Allow for entertainment expenditure such as movies/games, snacks, transportation etc.If a child is made responsible for these expenses he/she will learn elements of budgeting.Finally add some extra money to make saving possible if you can keep your child’s allowance(“pocketmoney”) with that of his friends.A child whose purchasing power falls way below his peers’ can feel left out; a young tycoon, on the other hand may be tempted to show off or buy friendship.It can be tough but let children face the consequences of their money mistakes.Experts advise that an allowance(“pocketmoney”) should not be tied directly to a child’s daily core. Kids should help around the house not because they get paid for it but because they are also part of family and have responsibilities. You might, however pay a child for doing extra jobs at home that can develop his/her initiative.
Let children work part time
Work can boost a child’s confidence and teach him the dignity of labour. As children grow older and their employment options expand they see that they are becoming literally more valuable in their contributions to society. But don’t let children overdo it.Because of the academic pressures they face in school, kids should work only during vacations.Nowadays older teenagers in major cities can often find work in fast food restaurants, in boutiques or with market research organisations.And kids with an entrepreneurial sense can explore their own money-making opportunities.
Teach children how to save
That of course, is easier said than done, since kids can be
notorious instant-pleasure seekers.You have to provide good reasons for them to save.You might start by limiting the number of special things you give your children, such as fancy bicycle or expensive clothes.Explain that if they want something of greater value in future,they have to forgo things of lesser value in future.Keep in mind, however, that for eight or nine-year old,saving for the future may mean saving to buy something next month-not next year.Long term savings for expensive purchasing like watches or
cameras are best kept in saving account.Children above 12 can start saving account.Point out to your kids that in addition to being safe their saving will earn interest.In the end, the saving habit will make kids appreciate what they have worked hard to acquire.
Show them how to spend wisely:
For older children an allowance teaches thrift.When ever your child agree for spending less on any shopping spree always reward him.Your reward must not too big in amount but big in value. Something your child really like or love to have but isn’t too costly. It encourages him to spend wisely. A child who doesn’t learn to spend wisely grow up into an extravagant teen.
Offer a preview of adult living expenses:
Many older teens live in an unreal financial world.Because they live at home, they don’t have many living expenses so when youngsters with hefty allowance are finally on their own and have start paying for their own rent, utilities, food, clothes and transportation, they can get quite a shock.Children who don’t learn about reality of household budget will have to unlearn the bad spending habits they have acquired to help them prepare for the future, Make older older teen responsible for a proportion of a household expenses. If they use the family car, ask them to be reasonable with petrol consumption or fill out of his allowance.They could also pay for their cellphone bills. Ask as your teenager matures open the book and show him where your money goes. This will help him understand what it take to operate a household.
Explain the proper use of credit:
Make sure your children understand that borrowing in any form cost Money.It is not a way of boosting income or a substitute for adequate planning or saving. Rather, It is used for emergencies, to take advantage of highly unusual buying opportunities to finance a major asset-one that retains its value over a long period. You can even give your child practice with simple forms of credit for a large purchase-bicycle or an i pod, e.g. by cutting installments from his or
Set a good example:
Children even preschoolers learn by imitation.If bills are a frequent source of family arguments, if saving is neglected in order to make an impression on the neighbors, your children will probably pickup the same behavior. They will also learn from you how important-or unimportant-you feel it is to give to worthy causes.Step back and take a look at your attitude towards money.
Do you for instance, ever use it as a substitute for love?
Some parents give their children gifts to make up for their absence. But kids far prefer the affection of parents and the time spent for them.And even if they prefer candies in their ignorance as a parent you are not fulfilling your duty.Your main purpose is to make your child money conscious. You cannot create money consciousness in your child if you yourself are not money conscious. If you think money consciousness is saving, it is not actually. I and even You might had seen many a people who save enough money till their old age but they stake whole their life for a handful of money for few years of old age. Money consciousness is for living life abundantly rather than living few years of old age. Do not suck off life of your golden years. Life is not a saving, not even accumulations but an unfoldment. Accumulation of life and luxuries is result of creation, not of saving or competition. Teach your child to create money rather than to save or compete for it. This is the way to make your child successful.I hope you like these pocket money / allowance tips for children.Please do share your thoughts in comments.