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Proper Money Management? 5 Valuable Tips on How to Teach Your Kids

Proper Money Management? 5 Valuable Tips on How to Teach Your Kids

Wanting a good future for our children is something that every parent has in common. So how can we make sure this happens? Well, there are a multitude of options on the table for you to consider but let’s start with the basics and that is financial discipline and prudence. You can instill good work ethic, righteous morals, and help your child excel in school but if they do not know how to manage money, none of the things will do them any good.

The foundation to a successful life is knowing how to properly manage your finances. Knowing how to invest, when to save, and how to use your money wisely is crucial when climbing the ladder of success. So, how can you teach these valuable life lessons to your child? Well, here are a few pointers that can help get your kid started on the right path:


Teach Your Kids How to Invest

Investing is a wonderful thing, especially when you start early. Teaching your child how to invest is a superb way to show them how to manage money. You could start out by giving your child a savings account or even going a bit further with a savings bond. Both have their pros and cons but they teach the same lesson, that saving money is awesome.

A typical Singapore Savings Bond will cost around $500. With a year or two of saving money and with the help of ang bao cash, your child should be able to afford it. This is a low-risk form of investment that will show your child how compound interest can grow their money.

You and your child can keep an eye on their investment every year, so they can watch their money grow as time goes on. It is also a good idea to explain what compound interest is to them. Investing is something many kids don’t even know exists. By showing them the ropes and letting them watch their own money grow before their eyes, this will get them excited about saving and investing.


Teach Your Kids How to Earn the Things They Want

It is tempting to just outright buy whatever your child wants because as parents, we just want our children to be happy. However, it is fine to do it once in a while but if this is a practice you get your child used to, this can do some serious damage. Eventually, your kid will just expect to have everything handed to them whenever they want. This is something we want to avoid.

Instead, when your kid wants you to buy them something, you can use this as a learning opportunity. There are a plethora of ways you can go about this, such as:


Giving Them a Budget

One option you can try is to give your child a budget. You will still be buying them what they want but at least through this method, you will also be teaching them the value of money. Let’s say you give them a budget of $60. They can use this to buy anything they want or they can opt to save it for something more expensive in the future.

This will teach them that some things are worth more than others and that sometimes it is better to save. For example, they could buy some toys right now or they can save up and get a video game later.


Give Them an Allowance

Another option is to give them an allowance. However, just don’t give them money out of the blue. Have them earn it through chores. They can use the money they’ve made on anything they want.

This will teach them that money does not grow on trees and it has to be earned. So when they want to purchase something, they know what it takes to earn it and that it is something that won’t come freely simply because they asked for it. Having your kid work for their money, will teach them the value of not only hard work but also of their cash.


Don’t Give Too Much Pocket Money

Even if you are giving your kid an allowance, we still should watch out for them financially. For example, giving them lunch money for school. The trick here is to not give them too much money. You will want to teach them how to budget their funds so they do not expect you to just give them cash whenever they want.

If you are giving them money for their school lunch. You should give them enough that they can get something that will fill them up but not enough that they can splurge on expensive treats. If they want to get the more pricey stuff, they will need to save their money for it. Delayed gratification will further instill that if they want something, they need to save, budget, and work for it.

If you give your kid enough money to buy whatever they want, without having to budget or think about how much they are spending, this is only enforcing bad financial habits that will follow your child into adulthood. Eventually, they will only see what they can buy and not care how much it costs because they expect you to simply give it to them. This is why it is important that when you give them cash, you do not give them too much so they learn how to manage money effectively.

It is not difficult to teach your child how to be prudent with their money but it is important to do. These basic life skills will not only help your kid have a good life when they grow up but it will help them teach their children about financial management as well. However, this doesn’t mean you shouldn’t spoil your kids sometimes but make sure there is a limit and that your child knows the effort and value behind whatever you give them. This is definitely a lesson your child will be thanking you for when they grow up.



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