10 tips for Money Management : Helping kids achieve Financial Literacy
Time to introduce Money management in Kids/ Savings!
When I was small I often heard her say “ SAVE TODAY FOR PROSPEROUS TOMORROW”. Its now that I fully understand the reasons & practical implications of Money Management which made us save as little as Re1/-. It was an exciting journey as a child when we had multiple Piggy jars assigned for: Toys; Buying Gifts; Education; Sports. I still remember how every year mom used to redefine goals and re-allocate money. How she used to give small loans to her friends in return of some favour or charge interest. Purpose of charging interest was not commercial but just to ensure that they return the hard earned money.
And so now comes the same challenge in my life to inculcate the habit of “Savings” in my kid. Although its very early to begin, but I believe the earlier the financial literacy, the better it goes down the line. At this age (2-2.5years) kids can be easily moulded the way we want.
Money management for Kids :
I just thought of many ways to start (only one/2 can be applied right now ,for he is just 2.5years) & so it came out in the form of a “Money Management post”.
This learning cannot be definitely in a serious mode, it has to be fun & practical way of learning.
Read on to developing Resilience in Kids.
Sharing 10 money management tips for kids, i.e introducing kids to “Financial Literacy”:
1. Initiate at the right age & grow with time:
Well that’s a very big question, when to start educating kids of Money Management? Even some months back, I used to ponder on this question, but I really found that there is no age limit. By 2years, kids understand that we ought to pay “money” to buy anything we wish to. And yes, that is the beginning.
“My kid used to say, “Mumma give me Rs10, I wanna buy a choco’s packet”. He didn’t knew what all denomination of Rs10/20 meant per say cost of items, but he knew that I need to ask money from Mom/dad to buy what I wish. That was the beginning, when I knew I had to lay the trap;). Yes, I started saying him that he can ask for money only once a day & only one thing out of 10 wishes will be granted a day. The results were great, it was the start of saving. And, he started wanting for only one thing a day & that too in a calculative manner”. He used to think “what he wanted amongst the panorama of his most desirable items & opted for one, a day. So I believe, the early you start, the better the concept sharing & its application:)
2. Situational tasks to decide & save:
Let them grow a lil big & give them fixed amount (little less than what you think could be the actual expense). For the sake of example, let them buy you some grocery/house requisites with that bunch of money. They’ll feel confused if the money stands short but then they will have to decide on the most important one. That way, they will for sure learn to manage money in such situations & be decisive. Don’t expect your kid to leave “his favourite” when he drops out of money;). So better let him know what all is a must to bring for you. Make them “Money managers” and ask them to manage the finances & choices.
3. Enjoy & promote small savings:
Let their friend’s birthdays be interesting & creative. Why find an Archies or Hallmark gallery nearby? You need to spare some time to sit with your child & help him make a card or gift out of his own creativity. Self made things are too emotional & it creates a sense of “Love” & “belongingness” in a child. So why not replace expense by Love + Creativity.
4. Money games for kids:
Wow, I loved them & even now if I get some time out of my schedule, I’ll sit & play Monopoly. Once in the ages of 6+, get your kids business games as Monopoly, to learn “Money management” in a perfect fun way. Do narrate & link the game with real life experiences to make it easier for them to relate. Learning in a fun & practical way goes well beyond the theoretical one.
5. Piggy bank:
A practise I’m sure every mum would be doing for their kids. But don’t just keep one piggy bank, rather separate it for different purpose. As in one for “Buying Toys”; “New Dress”; Cakes & bakes; Ice creams & Snacks”. Let child start saving a penny basis his choices. Let him decide where to add money & after some months why not buy him an ice cream from his ice cream jar? If that’s empty, he’ll have to start saving in that jar to get another one:). It’s actually a great idea to help kids develop their likings. Also set a limit for every piggy bank, so that you don’t come to terms later on that only “Ice cream bank” has money & rest all are empty;). Kids are smart, you ought to be smarter Moms & dads!
6. Show them Savings grow:
With investing every penny in their piggy bank, show them daily how Re1/- is being accumulated to Rs10/-. Start telling them the worth of Rs10 vis a vis Re1. This will bring the facts on the table that more the money saved, something big & better can be bought from it. Promote them to make it big before spending! You can also cite your example of how saving every 500/- over years made you purchase a Car, which your kid loves to roam in! This will get him to terms that big & beloved things don’t come that fast and easy. You ought to work, save & wait to get it. With this they’ll show more perseverance to own the thing they want with time!
7. Make them a part of financial discussions:
Once a child reaches his maturity level, try making them part of your financial discussions. Don’t think of it as an adversity if your kid gets to know of the financial condition. If you’ve bought a house, drag your kid in learning the hard earned money which went into. That will make him more mature & he’ll get into the terms of when to curb spending unnecessarily. They will learn the importance of saving money by looking at practical situations.
8. Invest their savings:
Once the child gains enough understanding of finances, start investing their savings in a form of “Child account” or similar schemes running in your country. Explain him the nuances of investing. How money will grow with time, when can the principal amount mature & what can be the things this amount can be used for. As in, it can be used for pursuing high education dreams of your kid; or getting enrolled into some sports academy or anything they love.This way, kids will promote saving & investing every penny right from the early years. It is a great approach to money management for kids.
9. Fix Budgets:
While kids are small, their demands are big, rather huge! They want everything from a small car to a their latest “Outlast Trinity” every month. A “No” every time will make your child pessimistic. Rather fix budgets from a very tender age. Let your kid know his monthly budget to spend & allow him to decide what he wants from that amount. Multiple small things or one big thing. Make your kid aware of the things which can be available in that budget & then help him tap on the most desirable one:). This way money management will be a happy note for the entire family!
10. Get them surprise from savings:
Finally, even we love surprises so why not for kids. Even if they are following 70-80% of the “Money saving advice”, encourage them with some surprises, although not daily. Let it be very random, so that kids don’t get into the trap of set expectations. Undeliverable’s then can cause an unhealthy attitude in them. You can also give them surprise, not in the form of some gift but by adding some extra penny in their piggy bank. This way they’ll be more excited to save.
So why wait? Start the “Money management for your kid” right now!I believe, you’ve got tons of ideas in the form of “Age ladders” to opt from!
Share down some of your creative ideas as well in the comment section below. Some really creative ones will be added in the post:)