Teaching money management to kids (Age wise tips)

Penny Saved Is Penny Earned: Money Management Tips for Kids

Parents are the first teachers for their children. They learn from us and try to replicate our moods, actions and to some extent money management as well. At least, they learn and understand our approach towards spending money, our thought process and constraints. We need to set an example and illustrate to them by leading examples, that nothing comes easy in life and each penny earned has lot of hard work behind it.

Money Management-Toddlers & young kids

(Age under 7) 

Piggy Bank / Transparent Container:

Children love to do it in iterations, putting coins in a piggy bank, shaking it, keeping it back and again repeating. This not only improves their motor skills but also help develop some understanding of early money management concepts like “value for money” and “storing money & keeping it safe”. 

This could also be a safe weapon for parents to deal with children. If they behave nicely, you could reward them with money to be put in Piggy Bank and take some money if they behave inappropriately.

You also need to explain to them the basics about money management like contentment, while you can afford, you should not be buying every toy they ask for them. I always tell my children that you cannot have all the toys which your friend has and same applies to you friend. Share or exchange toys, limit your demands etc. 

Role Play:

My younger one loves to become vegetable vendor or a shopkeeper.He has some dummy currency notes/coins and does not give me a single vegetable/toy till I pay him. Off late he was swiping my visiting card the way I do my ATM debit card for payment 😊

Money management-School Going Children

(Age 8 – 15)

Give Monetary Rewards & not Pocket money:

There is difference between “Need” and “Desire”, and one need to understand and accept that, earlier the better.

We need not get emotional and impulsive and surrender to everything the child wants. Let them understand the importance of hard-earned money, let them understand that they cannot have everything and may tell their preferences based on their priorities like they want a new dress or a new school bag? Let them choose between new pencil box or crayons for instance.

Asking for toys or gadgets is very common, if such a request comes to me, I tell my child to evaluate the importance, value add with that toy/gadget to your life/home and he himself answers and gets convinced if his request is not executed. Instead of being harsh and hard, I believe in explaining things to children and reason in case we say them “No”. You can decide their rewards based on their code of conduct, honesty towards their studies and other activities, good discipline and ability to tolerate rejections. They should earn the reward/pocket money rather than considering it as their right to ask from parents.

Indulge into Money Earning Games/Activities:

I encourage my child to put up stalls in our society Navratri annual celebrations or at his school fest. These small activities and initiatives help him understand money management. This gives him a sense of achievement and on lighter note, it’s fun to see his hesitancy to give his money to me 😊.

He also loves to play Business/Monopoly game, that helps him understand how to use his allotted money wisely.

Financial Reads:

You might start explaining/giving some newspapers/books to read related to finances/banks etc.

Involve them in your monthly activities of net banking, share trading or online bill payments etc.Do you know?Warren Buffet, the multi-millionaire started trading in shares at the age of eleven?

Money Management-Age 15 and older 

Teach them importance of savings/Mutual Funds/ Share Trading etc.:

Based on your knowledge, expertise and field of interest, give some good reads or make children start doing in real. Some share trading or investment in funds etc. Show them the magic of compound interest and how one should save now for better future tomorrow.

Make them an account holder, let them sign few cheques (like for newspaper subscription etc., or let them update pass book etc. Let them pay electricity/internet bills from their debit/credit cards.

Managing Budget:

They can also opt for student loans/scholarships for their studies, this will surely make them responsible. They anyway might do some summer training or on the job trainings etc. They will earn some money and will try and manage their expenses within. Tell them to maintain a diary and write their daily expenses. A month later they can review to realize where money was spent unnecessary etc. and could have future learnings based on the same.

Risks with Debit/Credit Card: 

Children should be taught the risks of carrying any of credit/debit cards. In their age it will be a fashion to carry one, little do they know the responsibility attached with it. Certain principles need to be taught to them like restriction on the usage limit, making them equally responsible to pay credit/debit cards bills etc. They should not get fooled with any lucrative credit card offers etc. These days due to cyber fraud, children are vulnerable to give their ids and passwords etc. Refrain children from sharing those etc.

Teach them Importance of Giving Back:

Once they start making a little money, be sure you teach them about giving back to society. They can pick any NGO, charity group or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.

To sum up, to spend money wisely is the key. Proper Budget planning ensures you have enough money for the things you need & things important to you.However, don’t forget to teach them is money is essential for a comfortable life,but it has to be earned in the right way and there is more to life than just money!

Money often costs too much. –Ralph Waldo Emerson

Happy Parenting!

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About the author of this article:

Meet Abhrekha Jain Sahlot, she is full of life, energy and enthusiasm and is a regular contributor to Mommy’s Magazine. A gold medalist computer engineer she has been working with top MNC for over 13 years nworking motherow.

 A doting mother of 2 boys ( Nabhanyu & Daksh Sahlot), life has given her various opportunities to explore and she seems to have taken best of everything. From singing, painting to acting, swimming and basketball, she has been into various co-curricular activities from artistic ones to the sports ones.

However, currently, she enjoys sharing her blessings with fellow women by addressing women and parenting forums and helping women in her capacity and spread message & the importance of being happy & content.

email-  abhrekha.jain@gmail.com

3 thoughts on “Teaching money management to kids (Age wise tips)”

  1. I am glad to see the age wise analysis. I would say one thing if you give the knowledge of shares and mutual funds at age of 15 then it is a high risk of getting addicted to in that phase, I am not in favour of that rest is fine.


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