Personal Finance for Kids 101: Instilling Financial Awareness in Your Children

Today's youth are not as ignorant as they were before. They no longer work in farms and handle currencies just as frequently as their parents do. Hence, they understand the value of money, and spending money becomes a norm for them. Unfortunately, they do not know the value of saving as most of their pocket money comes from their parents. Even if they earn it themselves, most of them do not have the discipline to save. Your role here is to guide them to successful saving and investments.

Children should be taught how to save from childhood. Once they have been given pocket money, educate them to save at least 20% for rainy days, or that shiny toy in the window. Understanding that money doesn't come easy also helps. This will prepare them for good money management when they are older.

Here are some tips and hints for you to teach your children how to save money.

Teach them that money does not come easy

For many children, the source of money is you-hence they think that money is easy to come by. Just ask mummy or daddy for it. It is your job to teach them that money is hard to come by, by showing them the poor children in the world through documentaries.

Show them how to save

You must also teach them how to save. This can be done by opening a kid's account for them at your local bank. Many banks offer incentives for kids to save, such as free monthly stickers, toys and such.

Give their allowance in cash

Do not give them credit cards. Many parents are wealthy, and to spare themselves the hassle of dolling out allowances daily, they give their children credit cards instead. This is very foolish as it encourages wanton spending sprees which will in turn defeat your goal of teaching them to save.

Make them work for extra money

Should your children require more money for new shoes, for example, make them work for it. Do not give more money other than their fixed allowance. Doing so will encourage free spending-after all, they could always get more from their parents. Instead, reward them every time they mop the floor or do dishes, just like working outside.

Do remember that money spending is not learned in a day. You need to be consistent for a long period of time and not indulge in wanton shopping sprees in front of your children. This is because they might learn and copy your actions, which will make training harder for them.