Children always ask for money from their parents, they love to have the freedom to spend it on candy, snacks and toys. Even though it is a child’s choice to spend money on whatever they want, it is important to teach them about money early, so as to have an understanding on how to manage their money.
This education on money management is a foundation that should be taught to every child. They should get the correct information and practices so they can have basic financial skills before they have to manage their money by themselves as adults.
Here are some of the ways to teach children about money:
1. Lead by example
Children are constantly watching and listening. Actions speak louder than words. If you want your children to learn how to save, they must observe you saving. One example on how to do this is in the buying choices you make. Explain why your choice between brands, and how it affects your overall budget. Another example is, communicate how using coupons helps the family save money.
2. On the Job Experience
In order for children to understand the value of money, children need to learn that money is earned, by working. This seemingly obvious concept is sometimes lost on children. Teach them that money is earned through working and not just given. Get them used to this idea by paying them to do chores around the house.
3. The Container method
Hiding money in a container, is an old traditional concept, present in almost every culture in the world. You can use this practice to teach the concept of save, spend and give. Once they have money, kids need to know what to do with it. Have them divide the money into 3, and put it jars labeled save, spend and give. The spend jar is for treats like candy and toys. The save jar teaches them to save for a goal in the future. Finally the give jar reminds the children to give to those who have less than they do.
4. Open a Junior account
So by now, the children understand that money is earned, that a portion of that money is saved ,and they can watch their savings grow in the save jar. The next step is to introduce bank saving , to keep the money safe, and grow their savings by earning interest.
Most banks across the country have introduced junior accounts. A parent also can contribute to these accounts as an added incentive to save. The bank accounts opening balance varies from kes 200- 5000.
The money saved earns an interest depending on the bank’s terms and conditions. Most of the major banks offer junior savings accounts, be sure to inquire with your own bank for account options. Helping your child open a junior account will teach them valuable money management tips that they will use till their old age.