Children should be taught to properly learn the value of money. They can do this by earning their pocket money and doing various chores. They should do this within their capability. They can earn money by doing simple chores, such as mowing the lawn, cleaning the car, vacuuming the house and helping with the dishes. This can set up early entrepreneurial mind. As an example, children can be taught to do gardening and they can sell vegetables from the backyard to their mothers. When getting the first money from their hard work, children will feel very happy. After children get some money, parents should encourage them to save. Children can learn to save from as early as the age of 6. Children can be given goal of what to buy.
There are banks that allow children to open their savings account. The lowest age limit could be six years old and the special savings account could have details that are appropriate for children. As an example, the account may allow for lower minimum balance. Although the interests of these accounts are usually lower, your goal isn’t to invest, but to teach children to save. Children will feel proud when their savings begin to grow. Once children have their own savings account, they can start to have some savings goals. Once children reach 10 years old, they can start to have better view on money management. A good way to save is to tell children to save about 10 percent of the monthly allowance. It means that in one year, they will get 120 percent worth of monthly allowance or more, if we consider the interest, no matter how meagre it is. Initially, children can be allowed to purchase anything they want, such as toys or game console, just to get them motivated. For the second and third purchases, parents could instruct children to purchase something more useful, such as low-cost laptop to improve their educational process.
For teenage children who already have arithmetic capabilities, you can teach them to make budget. With a good budget, you can make the most of your money. With a budget, children can make a list of essentials and non-essentials. They will try to correlate their current amount of money with the essentials. After that, they can find out how many non-essentials that they can afford. Again, make sure that saving is part of the essential expenses, with at least 10 percent of the regular allowance or income allocated into savings account. Instead of teaching children to use credit card, they should be told to use only debit cards. These cards should be used to make implementing budget more convenient and not to make spending money easier, which can potentially increase expenses unnecessarily.
Children should be taught the law of delayed gratification. It means that children can be taught to work hard and save before they can buy something or save enough money. Delayed gratification also teaches children about being patient. By following the above steps, parents can equip their children financially.