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As children grow, they come to know what money is by observing us buying toys and chocolates for them by giving the shopkeeper that colored paper – called ‘Money’. While they begin to understand that to buy anything we have to give money, it’s equally important to make them understand that they can’t buy everything they want or everything is not worth buying. In my opinion, it’s never too early to start teaching our kids about the value of money and savings.
Some ways in which we can encourage our children to understand the concept of budgeting, saving, and investing according to me could be :
To begin with , on child's birthday, we can buy them a piggy bank so that, he starts saving a fixed amount of money every month. After all, it is very important that our kids get used to the idea of allocating money for spending, saving and sharing at a very young age.
Kids will be more influenced by their peers at this age. They may be more aware of high-priced sneakers or jeans, and be more vocal in wanting these items. This is the perfect opportunity to help our kids write down some financial goals if they want to purchase a big-ticket item such as video games or designer clothes, and we can use these experience to focus on the act of saving. Have family meetings to talk about family finances (e.g., paying for the house, food, gas, vacations, etc.). We parents can set an example by the way they handle money. For example, when kids are young, we do not have to buy them designer label outfits that are over-priced. Even if we have money at our disposable, we must not send the message that the most expensive item is necessarily the best item or that it will buy them happiness. Our kids will not notice the label on the back of their shirt.
Considering rewarding our children for their savings efforts by providing some kind of incentive program is always a good idea. We can match all or part of our kids’ savings. It won’t be a bad idea to involve kids while chalking out family’s monthly finances. We could infact sit down with our children and discuss the ways in which they could spend their pocket money. This will not only help them understand that they should plan their spending, but it will also ensure they don’t make unreasonable demands. This exercise will surely help in a long way and assure that our child’s first paychecks don’t burn a hole in their pockets.
Assigning Budgets concept should be explained to the kids. I remember, it wasn’t too difficult for me to manage an entire month on the meager pocket money – simply because, I had a budget set for myself and would never go beyond that. I knew I had limited money to spend and would not get more. Further, any additional allowance was hard to come by. It’s the same rule and principle that we have to pass on to our kids. That way we will be able to discipline their spending habits and in a way make them learn about money management.
Will end with the below MONEY poem for the "Little Ones"
The Baby Kangaroo
"My baby is a bright one,"
said the mother kangaroo.
"With money in my pocket,
he knows just what to do."
He counts the nickels all by fives.
The dimes he counts by ten.
And if they drop, he quickly
picks them up and counts again.
Each time I give my son a coin
he always hollers, "Thanks!"
And when he's got a lot of them,
He puts them in his bank!