Here are some tips on how parents can teach their children money management at an early age.
By Javed Tapia
Wikipedia defines a “Piggy Bank” as a traditional name of a coin container normally used by children to save money. It has been the epitome of savings and an integral part of the lives of parents with children. Is there more to money management than just a “Piggy Bank”?
Money management must entail more. As parents, a little effort and a few minutes of your time will enable children to value money, use it wisely and practise smart money management.
Have you tried giving your children a monthly allowance and asking them to save 10 per cent of it? The exercise will help you to gauge the financial astuteness of your children. You may guide them with a few tips while they learn the ropes of enhancing their Piggy Bank, all by themselves.
When the child’s intent is to save from her/his allowance, negotiation is a corollary. By negotiating a better deal when they spend money, children will become more accountable towards their expenses. The learning from this exercise would be a good step towards making the child a smart money manager. Are you prodding your children to negotiate better when they make their money decisions under your watchful guidance?
As a parent, you must encourage children to budget the allowances you give them. You must help them to create budgets across expense categories such as food, shopping, books, travel, movies and so on. Budgeting the allowance helps children to analyse expenses, derive insights and learn to manage money better.
Imagine giving your child an allowance for a month while challenging them to spend less than 5 per cent of it on a given day, or in one transaction. The experience of managing such challenges helps children to build financial discipline. It makes their “financial prudence” journey enriching and enjoyable.
As a parent, you can use digital and mobile-based money management solutions to usher your child into smarter money management. You can give allowances and emergency cash to children instantly using these solutions. You can receive updates on their “expenses” through digital channels via a few clicks on your smartphone.
There can be meaningful conversations with children using the spend data, patterns and analytics offered by digital money management solutions.
(The writer is the Founder of Slonkit.)