Money is important. But Money is not everything. This is what a child should be made to understand.

Being happy must be the yardstick of measuring success of life instead of the wealth one possesses. Similarly, children should not judge people based on the possessions they own. 

Teach Kids Good Money Habits

This understanding, when gets imbibed during the growing years, can lead to building a happier life for himself and a better society for everyone.

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How to Teach Kids Good Money Habits?

Let us take it in stages as the children grow.

1st Stage of Money Management for Children

Teaching money-management for children should start by sharing of things with other people. Teach them to give their things at a young age, through modelling of this behavior by parents and elders in the surrounding.

Sharing, isn’t always giving away the things.  For children, it is more playing together without fighting and without saying “This is mine, this is yours” during the play time.

If the idea of sharing is rooted in the children’s hearts at a young age then they will keep this ideology for the rest of their life. Sharing can range from giving a pencil to their classmate to giving some of their toys if they have much of it to a guest.

2nd Stage of Money Management for Children

Encouraging them to barter their belongings with their playmates. Make him understand, he is about to exchange with something he has and ready to give up with something he needs. Basically, it should be as an understanding he and his friend(s) are coming with terms with the exchange without having to think about the size, the colour of the toy, for example.

Importantly, as a parent, never discuss the cost of the thing. The children, very young, are not ready to understand the monetary values yet.

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3rd Stage of Money Management for Children

This is the best time to teach the child about money management. Tell them what can be bought with money. When they ask for something from the market, go there, ask the child to see the cost of it and physically give the cash to the cashier. This will the help the child to understand the spending better.

Teach them to save, as in what they get as cash. Gifts from elders, rewards you promise for your children. Nevertheless, parents should not force their kids to save money as this can lead to children thinking that saving is basically your parents taking away your money. Find out a moderately expensive thing the child wants and tell him to save money for it. They can set a limit on themselves to how much money they will spend on things like candies, toys, chocolate or cakes.

Use a clear jar to save money. Even if a piggy bank is more appealing, the children would not be able to see their money grow. While using a transparent jar, children would be able to see their money grow, making the activity of saving more attractive.

Avoid using money as a reward for daily chores and small things. If you reward them for this, they will be expecting money for everything which is not right. These types of things are duty for the children and the child should do these expecting nothing in return.

While you make sure acknowledge and appreciate their discipline, never reward for a duty that has to be fulfilled.

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4th Stage of Money Management for Children

Help them spend their savings, and never force how they should do it. Suggesting/ advising is welcome always, but never be too compelling with his choices, at the least when he wants to buy something for the first time. He might end up making a wrong choice in buying, but it will teach the child to be less careless in the future. Ask the child to be sure about what they want to buy. 

As the child enters teens, a bank account can be opened as well. The children may be involved in a number of activities which give them revenue. Teaching them to maintain a bank account is a good thing.

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Few Things –

  1. Never let the child use the real money until a certain age and/or understanding.
  2. Encourage the child not to buy too many.
  3. Games like Business, can help a child manage money.
  4. Never buy anything the child wants every time.
  5. Allow the child to make his choices too.
  6. Avoid Impulsive buying.
  7. Stress on contentment.

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