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Let’s imagine that your child has some money and is eager to go shopping or step out to visit one of the popular kiosks on the street to buy biscuits and sweets.
Will you permit him or her to do so? I guess the answer will depend on the age of the child and how well the child must have been taught about money management.
If you are a parent who gives allowances to your kids, you should double that practice with supervision on how to use money.
If you don’t, your child may get to waste most of their money on irrelevant things and will likely develop a poor spending habit which might be hard to break away from as they grow older.
For example, a child might grow up to be a successful person but has already grown into the habit of spending money on comics and biscuits and now spends it on expensive but not-so-relevant phones and other gadgets.
There is the possibility that this kind of person will always be short of cash to buy important and very relevant things.
In this article from Naijassador we will be looking at 7 ways to teach your kids about managing money.
- As soon as children can count, introduce them to money.Take an active role in providing them with information.
- Help children learn the differences between needs, wants, and wishes.This will prepare them for making good spending decisions in the future.
- Introduce children to the value of saving versus spending.Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money children save at home; children can help calculate the interest and see how fast money accumulates through the power of compound interest. Later on, they also will realize that the quickest way to a good credit rating is a history of regular, successful savings.
- When giving children an allowance, give them the money in denominations that encourage saving.If the amount is 500 Naira a week, give them 5–100 naira bills and encourage that at least one hundred naira be set aside in savings weekly.
- Use regular shopping trips as opportunities to teach children the value of money.Going to the market is often a child’s first spending experience. About a third of our take-home pay is spent on food and household items. Spending smarter in the market can save lots of money for a family yearly. To help young people understand this lesson, demonstrate how to plan economical meals, avoid waste, and use leftovers efficiently. When you take children to other kinds of stores, explain how to plan purchases and make unit-price comparisons. Show them how to check for value, quality, reparability, and other consumer concerns. Spending money can be fun and very productive when spending is well-planned. Unplanned spending, as a rule, usually results in 20-30 percent of our money being wasted because we obtain poor value with our purchases.
- Alert children to the dangers of borrowing and paying interest.If you charge interest on small loans you make to them, they will learn quickly how expensive it is to rent someone else’s money for a specified period.
- Establish a regular schedule for family discussions about finances. This is especially helpful to younger children–it can be the time when they tote up their savings and receive interest.Other discussion topics should include the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth. With teenagers, it’s also useful to discuss what’s happening with the national and local economies, how to economize at home, and alternatives to spending money. All of this information will be important as they take on more responsibility for their financial well-being.