Money is a very interesting discussion. All people need money to run their lives. Knowledge about money and it’s skill set is very important for everyone. Therefore, parents should introduce knowledge about money to children. We have heard the famous jargon about this, it is called financial literacy.
Before discussing introducing financial literacy to kids, I will explain the definition of financial literacy. There are many definitions of this, but I will try to explain the basics. Financial literacy is the ability to know the flow of money starting from how to get it in the right way, manage it, spend it in the correct way as a donation to help others, and so on.
Through the above definition, essentially the scope of financial literacy is very wide. In this writing, I just limit the discussion about tips to teach money management to kids.
Introducing money management for kids
1. Encourage the child to make a moneybox
Begin the introduction from fundamental phase : a place to save money. Have a delightful experience in making this moneybox with your kids. It makes kids enjoy to learn money management.
As a parent, you have to be creative in this process. The material can be of paper
such as envelopes, or obtained from food cans. Make several moneyboxes (more than one), its function will be explained in the points below.
2. Give a name to each moneybox
I would like to give an explanation of this. This is based on my experience at home.
For example, there are three moneyboxes, each named according to its function.
The three moneybox are:
a. The place to save money, label this moneybox with savings.
b. Place for daily expense, label this moneybox with expenses.
c. A place to donate to others, label this moneybox with charity.
3. Implementation started (the journey begins)
Once you give money whether it's daily, weekly, or monthly, the first time that you have to do is teach your kids about the distribution or allocation of that money.
The percentage is up to you, for example, one third (1/3) to save the money so that this money placed in the moneybox called savings (money is used if there is a very important purposes such as continuing education, hospital costs, or buy something needs beyond monthly expenses ), one third of the money to the operational or daily expenses (grocery, transportation cost, etc.), and the last one third put in the charity box (money is used if your kids want to donate to other or join charity program)
4. Encourage to discipline for recording cash flow
For their operational costs such as buying snacks, bus ticket, buy soap, and so on, urge them to note what the expenses’ date and how much the amount. Now, there are many applications either on a PC or on the tablet regarding this or if you want a simple, your kids can record it in Microsoft Excel or other spreadsheet software.
5. Motivate them to be prudent
Look at and analyze the cash flow records per month, you should analyze it together with your kids, discuss whether your kid is wasteful or frugal.
If you decide based on the data that your kid is wasteful children, teach them that in buying activities there is a good general rule for buying something : you may buy something when you really need it not when you want it (need vs. want)
Lastly, I mention just five steps above about how to introduce money
management for kids. Actually there are many other things to be explained, I will explain other financial literacy knowledge in the next article.
Before discussing introducing financial literacy to kids, I will explain the definition of financial literacy. There are many definitions of this, but I will try to explain the basics. Financial literacy is the ability to know the flow of money starting from how to get it in the right way, manage it, spend it in the correct way as a donation to help others, and so on.
Through the above definition, essentially the scope of financial literacy is very wide. In this writing, I just limit the discussion about tips to teach money management to kids.
Introducing money management for kids
1. Encourage the child to make a moneybox
Begin the introduction from fundamental phase : a place to save money. Have a delightful experience in making this moneybox with your kids. It makes kids enjoy to learn money management.
As a parent, you have to be creative in this process. The material can be of paper
such as envelopes, or obtained from food cans. Make several moneyboxes (more than one), its function will be explained in the points below.
2. Give a name to each moneybox
I would like to give an explanation of this. This is based on my experience at home.
For example, there are three moneyboxes, each named according to its function.
The three moneybox are:
a. The place to save money, label this moneybox with savings.
b. Place for daily expense, label this moneybox with expenses.
c. A place to donate to others, label this moneybox with charity.
3. Implementation started (the journey begins)
Once you give money whether it's daily, weekly, or monthly, the first time that you have to do is teach your kids about the distribution or allocation of that money.
The percentage is up to you, for example, one third (1/3) to save the money so that this money placed in the moneybox called savings (money is used if there is a very important purposes such as continuing education, hospital costs, or buy something needs beyond monthly expenses ), one third of the money to the operational or daily expenses (grocery, transportation cost, etc.), and the last one third put in the charity box (money is used if your kids want to donate to other or join charity program)
4. Encourage to discipline for recording cash flow
For their operational costs such as buying snacks, bus ticket, buy soap, and so on, urge them to note what the expenses’ date and how much the amount. Now, there are many applications either on a PC or on the tablet regarding this or if you want a simple, your kids can record it in Microsoft Excel or other spreadsheet software.
5. Motivate them to be prudent
Look at and analyze the cash flow records per month, you should analyze it together with your kids, discuss whether your kid is wasteful or frugal.
If you decide based on the data that your kid is wasteful children, teach them that in buying activities there is a good general rule for buying something : you may buy something when you really need it not when you want it (need vs. want)
Lastly, I mention just five steps above about how to introduce money
management for kids. Actually there are many other things to be explained, I will explain other financial literacy knowledge in the next article.
