Children should see their parents putting away some more money (i.e. pay yourself first) when they get the pay check every month. It is much easier to save at the beginning of the month than at the end of the month.
If the children see the parents doing so every month, they many think it is the norm and pick up the same savings habit when they get their own pay check.
Sunday, January 10, 2010
Grocery Shopping
Take your child grocery shopping with you to let her have an idea of how much things cost. Explain to her why you choose certain brands over others. Teach the importance of looking at the cost per unit of an item rather the selling price of the item.
Explain to her the savings that can be made during bargains and the importance of having shopping list.
Household Expenses
When paying your monthly bills (be it for electricity, telephone or water) have your child around so that you can explain to her what each bill covers. This will make her aware of where the money goes each month.Understanding how much it cost to keep her in the lifestyle that she is accustomed to may even see your child chipping in to cut down costs like switching off the fans lights when she leaves the room.
Thursday, January 7, 2010
BUDGETING
Overspending is also part of the lesson about managing money. If it happens repeatedly, there would be a need to find out why it happens. Where did your child blow their allowance? Does she know where it went? If not, this may be a good time to suggest keeping a simple record of her allowance. This is where budgeting comes in.Budgeting will help her trace how she spent her money and determine whether the expenses are necessary or can be cut down
How soon, How much and How often.
How soon?
Your child is probably ready for an allowance when she enters primary school. She should be old enough to handle money to buy food at the canteen.
How much?
How much money your child is entitled to will depend on how much you can afford and how much food in the canteen costs. You may also want to have an idea of how much pocket money her classmates are getting.
Parents and child should agree on just what the pocket money is supposed to be spent on. Even if it is only to be spent on food in canteen, give a little above so that your child can practice decision-making.
As adults, we make spending choices and not all of our choices turn out to be right ones. Learning to live with the results of poor choice in spending money is valuable lesson, so let children make mistakes and learn from their mistakes.
How often?
At the beginning the pocket money can be paid daily since your child is young and is not used to handling money. But as your child grows up the allowance can be paid weekly and when she reaches her late teens it can be paid monthly.
The longer your child has to wait for the next payment of pocket money, the more she has to practise her budgeting skills.
Your child is probably ready for an allowance when she enters primary school. She should be old enough to handle money to buy food at the canteen.
How much?
How much money your child is entitled to will depend on how much you can afford and how much food in the canteen costs. You may also want to have an idea of how much pocket money her classmates are getting.
Parents and child should agree on just what the pocket money is supposed to be spent on. Even if it is only to be spent on food in canteen, give a little above so that your child can practice decision-making.
As adults, we make spending choices and not all of our choices turn out to be right ones. Learning to live with the results of poor choice in spending money is valuable lesson, so let children make mistakes and learn from their mistakes.
How often?
At the beginning the pocket money can be paid daily since your child is young and is not used to handling money. But as your child grows up the allowance can be paid weekly and when she reaches her late teens it can be paid monthly.
The longer your child has to wait for the next payment of pocket money, the more she has to practise her budgeting skills.
Wednesday, January 6, 2010
Why Allowances?
An allowance can be a good teacher because it allows children to manage money in a safe environment. The sum involved is small and any mistakes made will not be too damaging. It is not like when they are adults and the mistakes made can cause them to lose their house or car.
Allowances can teach them financial responsibility. For example, when your child wants to buy a new toy, she can be asked to save part of her pocket money to get it.
Depending on the age of your child, she may need help to achieve her goal (i.e., the toy). This gives you an opportunity to help her develop a spending and savings plan so that she will know how much and how long she has to save to buy her toy.
Savi
ng for a toy will teach your child about delayed gratification. A child who has enjoyed the fruits of saving up for a toy may be less likelyto be taken in later by the various choices of instant gratification like credit cards, easy payment and hire purchase payments.
Thus allowances give children a chance to make mistakes that are not too costly, to think about the value of what they want, to experience anticipation if they save for a few week and even to feel the consequences of overspending.
Do not make a practice of giving additional money if your child overspends. If parent is quick to bail out the child, the child will not learn the consequences of overspending.
Should your child overspend, she will then have to get a loan from you to meet her expenses. Set up repayment period to give her some practical experience in using credit.
But if your child keeps overspending it should be time to put her on a simple budget.
Allowances can teach them financial responsibility. For example, when your child wants to buy a new toy, she can be asked to save part of her pocket money to get it.
Depending on the age of your child, she may need help to achieve her goal (i.e., the toy). This gives you an opportunity to help her develop a spending and savings plan so that she will know how much and how long she has to save to buy her toy.
Savi
ng for a toy will teach your child about delayed gratification. A child who has enjoyed the fruits of saving up for a toy may be less likelyto be taken in later by the various choices of instant gratification like credit cards, easy payment and hire purchase payments.Thus allowances give children a chance to make mistakes that are not too costly, to think about the value of what they want, to experience anticipation if they save for a few week and even to feel the consequences of overspending.
Do not make a practice of giving additional money if your child overspends. If parent is quick to bail out the child, the child will not learn the consequences of overspending.
Should your child overspend, she will then have to get a loan from you to meet her expenses. Set up repayment period to give her some practical experience in using credit.
But if your child keeps overspending it should be time to put her on a simple budget.
Tuesday, October 6, 2009
Starting with toddlers
Starting with toddlers
Children are not born with good money management skills, they have to be taught. And the parents can start doing so around the age of three. By then the child will usually have a vague concept that money can be exchanged fo food or toys. This they observe when they go out shopping with the family.
Good Example
Action speak louder than words in forming the child's attitude towards money. Children can spot inconsistencies when parent say one thing and do another. Therefore parents should examine their own money attitude and practices.
This would, for example, mean not being overwhelmed by debts or not being a walking advertisement for branded goods.
Allowances
Children also learn from experience, so apart from setting a good example, parents should give the children practice in handling money. This is where an allowance can play an important role.
Children are not born with good money management skills, they have to be taught. And the parents can start doing so around the age of three. By then the child will usually have a vague concept that money can be exchanged fo food or toys. This they observe when they go out shopping with the family.
Good Example
Action speak louder than words in forming the child's attitude towards money. Children can spot inconsistencies when parent say one thing and do another. Therefore parents should examine their own money attitude and practices.
This would, for example, mean not being overwhelmed by debts or not being a walking advertisement for branded goods.
Allowances
Children also learn from experience, so apart from setting a good example, parents should give the children practice in handling money. This is where an allowance can play an important role.
