Money management basics for your kid

Schools teach the children about etiquette, safety, good behavior, physical health, and proper study habits but seldom they give lessons on money management. Money management skills are essential in a person’s life right from the time they grow up and face the world. Money is an important resource and stress should be given on how to handle it in a prudent manner. Children should be taught the basics of financial hygiene like budgeting and saving.

Involve your children in household finances. Tell them how much you earn; Give them real life examples to explain in a better way. Discuss with them about monthly expenditures and savings, etc. Remember that your children will follow your footsteps. So, if you are saving wisely, your kids may try to do the same, while if you are disorganized and extravagant, they may follow that trend as well. Try and be organized and planned in order to be a good teacher for your kids.

Once you get your credit card bills and mobile bills, make sure that you pay off in time. Discuss with your children regarding the same so that they understand the importance of repaying on time. This will help them understand the use of credit but also the conditions to it. Explain them the difference between debit and credit cards. Disclose your bank statements and account details to your children. Explain the transactions and how money moves in and out of your account.

Show your kid how to shop around for better prices and offers. What one may find in some store may be less expensive in another. Teach him how to draft out a basic budget plan and spend accordingly. You should also stress on the adverse effects of wastage 
Set up a TV time for the entire family where you could watch some program on money management and debt free living along with your kids. The real life testimonials and stories will give them a better view of the world. They would realize the value of money when they see stories of people who recovered from financial problems. 

The glittery world of advertisements can often draw your kid’s attention. He might ask for every flashy belonging of his friend or a gadget from a game shop. It is important that you do not pamper your kid by buying him everything that he wants. Instead you should try to understand why he finds it necessary and then make him understand what an absolute necessity is. In this way you can make your child practical in his views and prepare him for a good financial career.

Finally, let your child manage his own funds. Give him an allowance and let him spend it the way he wants to. You can understand the trend of his expenditure by observing casually. If he asks you for extra money or some thing in particular, tell him to use his own allowance. In this way you can teach him to save and not expect get everything in life for free. Once your child grows up and gets a part time job (say), it may be practical to set up a bank account with a savings so he can deposit his earning and earn interest. 

All these lessons on money management will help your child throughout his life. It will encourage him for a trouble-free frugal living.

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Patricia is a finance blogger and debt advisor. For free help on debt management, she recommends you to visit www.yesdebtfree.co.uk

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