To read more of our articles on personal money management visit our Personal Finance page.

Parents are the best people to teach children about money.  It is important to start teaching them when they are still young by getting them involved in money management.

1.        Bank account.  Open a bank account in their name and encourage them to save.  Most parents do this.  In addition to parents’ savings contributions to the account parents can offer to match their children’s savings efforts by contributing to their savings account exactly the same amount that they decide to save.  Owning a bank account will help children learn how to develop an organized way of saving and investing and will serve as a starting point for them to learn about the concept of interest rate.

2.        Open an “at-home-account”.  A piggy bank at home is another simple way to teach children how to save.  This could be anything from a home-made piggy bank such as a jar with a tight lid or a specially made piggy bank that can be bought from kids’ stores.  A piggy bank provides a convenient and easy way to save.  Money accumulated in the piggy bank can later be moved to the bank account. 

3.        Developing financial goals.  Help the children develop financial goals mainly short term, and assist them in developing strategies on how to accomplish their goals.  Give them a piece of paper or better yet a note book which they can keep for years and encourage them to think of goals, put them in writing and discuss with you how they plan to accomplish them.  This will provide them with a simple knowledge of personal financial planning techniques.  They can review these goals every few years to check the status and to adjust the goals or add new ones where necessary.

4.        Learning “how to fish”.  Get them to read simple money management books and magazines geared towards teaching children the principles of money and discuss what they think.  These books and magazines can be found in libraries or online and you can print out results to keep for the future.  Making it a routine to read these books and magazines will not only help them develop an interest in reading but also allow them to learn something new about money that they can put into practice.

5.        Earning some money.  Create jobs for the children to do for which they can be paid for.  At home children can be encouraged to do tasks in addition to the regular house chores (regular house chores should not be paid for) such as fixing the car or the house, redesigning the garden etc. for a small allowance. Also parents who bring home their work can give their children tasks that they can assist with, such as a librarian can let their child help in arranging library catalog cards in alphabetical order; a teacher can let their child help with filling out students’ grades on paper or computer, or typing draft exam questions on computer; a researcher can let them help with inputting data.  Letting them help for a small allowance will give them a chance (at a young age) to learn how to work hard, earn income, budget it, save and spend wisely.

6.        Creating a simple budget.  Children can be taught how to create and maintain a simple budget (monthly or semiannually depending on the frequency of their expenditures) for their school needs and other regular needs.  They can make a template which they may reuse in the future.  This will help them learn how to manage their expenditures to ensure that they do not spend beyond their means, which is the first rule of thumb of financial planning.

7.        Including them in regular financial tasks.  Allow them to participate in preparing or updating your budgets or when you are arranging to pay the bills.  Invite them to be there when you are handling financial matters and take them through the process of what you are doing and why.  This will give them a guideline which they can use in the future.

8.        Shopping around.  With your help and depending on their age children can shop around (window shopping) for the best prices for items they need to buy such as school supplies (before they buy them) and to record prices and places so that next time they have an idea of how much to budget for.  This will give them practical ways to minimize expenditures.

9.        The freedom to shop.  Instead of buying items for them, allow them the freedom to plan for their own shopping by giving them the funds and letting them lead the way to where they would like to shop and what they would like to buy and later this experience can be used as an opportunity to first praise them for the hard work and then pointing out any issues that may need attention as far as their shopping attitude.  This will show them that you believe in them and help them build confidence in their abilities to manage their finances.

10.     A giving spirit.  Teach them how to give first within the family and to others outside the family.  Encourage them to think of others and to donate something (they can start by giving just a little) for the benefit of others.  This will enable them to learn that money is not everything but that giving is about others and is more rewarding than receiving which is about self. 

To read more of our articles on personal money management visit our Personal Finance page.