Financial Education: 8 Tips to Teach Your Kids How to Manage Money

The Importance of Financial Education

The Parents who focused on providing financial education for kids, their kids tend to save more money, more frequently compared to those who didn’t (84% vs. 69%), said they received pocket or clothing money from their parents (84% vs. 64%).

Knowing Your Child: Types of Money Spenders

Before we continue it is good to realize that based on our personalities, besides our upbringing, we all are a certain type of spender. Understanding and knowing your child and what essentially drives them proves to be very useful when educating about money.

1. Learning by doing: pocket money

Six is a good age to start introducing financial education. Give your child cash pocket money, so it is tangible for them and they learn that money is more than just some digits on a screen.

2.Make financial education fun!

Go out shopping with them and let them pick out a nice piggy bank to put their money in. Sit down together and decorate a calendar that you can hang in their bedroom and note the dates by which they will receive their pocket money.

3.Teach them how to save

Start at the very beginning: they cannot spend what they do not have or haven’t earned. So, when introducing pocket money, make sure they start with saving some, if not all (in the beginning), of the money they are given, and have them put it in their new piggy bank.

4. What money can buy

Achieving financial independence starts with giving your child responsibility for their own money. Give them the opportunity to do it themselves. But guide them along the way.

5.The mobile phone

Sometimes it is hard for us to imagine, but the fact is, cell phones just are part of today’s life, even that of children as young as 8 or 9. By the time kids go to high school, only 3% do NOT have a mobile phone of their own.

6.Loosen up the reins

The older they get, the more responsibility they can handle and the better they can manage their money. When they start going to high school you can also introduce clothing money; a certain amount per month they get to buy their own clothes and shoes with.

7.Making mistakes is part of the process

Overprotective parents are the number one obstacle in achieving financial independence. Of course, you want to protect them from making financial mistakes.