It always surprises me how little we are educated about money and finance whilst we are at school, particularly as the need for a solid understanding of these areas is a key life skill. Only in the last 2 years has the UK introduced formal curriculum in this area to help prepare kids for the daunting world of credit cards, loans, mortgages, hire purchase agreements, pensions, and much more.
Most people learn more about money skills from their parents than from any other source. So, your kids will be learning about money from watching and listening to you. It is a good idea to encourage children to save from an early age, so here are some top tips to help them along the way. This is the first part of a two part series, the second looks at older children and finally independence in kids.
Money does not grow on trees
It is important that children have an understanding about the value of money. You can help them achieve this by giving them pocket money when they help around the house. It is also important that they understand that they may need to make choices when they spend their money. Here are 3 top tips for young children:
1.Use Different Envelopes/Jars
You may be familiar with the envelope budgeting system for your own money, but this can also work for children. On either envelopes or jars, have your child draw pictures of what he or she wants. You may also want to help your child understand that some items will take longer than others to save for.
For example, the short-term savings container might have a picture of a specific toy, while the long-term container might have a picture of a trip to Disneyland. Teach your child to set aside money for short-term and long-term goals, and have another container or envelope for spending on everyday items.
2. Match Contributions
However your children get money, from doing chores for an allowance or getting cash for their birthdays, match however much money they put aside.
You can also use physical rewards or treats instead of actual money as a saving incentive. For example, if your child doesn’t spend any money for a certain amount of time, provide a small reward or treat. You can also make the prizes better the longer your child saves. Try stickers, an extra 1/2 hour of video games, toys, or whatever motivates your child.
Board games such as Monopoly and The Game of Life can teach kids how to spend and earn money, but they don’t do a good job of teaching them to be savers. Instead, try online games such as Save! a free downloadable game from Mass Mutual Financial Group that can teach them how to separate wants from needs when it comes to spending. The game leads players through a 3D fantasy world where they collect virtual money while trying to avoid impulse buys called “iWannas,” more likely known to your children as candy, soda and toys.
Please note that beijingkids does not necessarily endorse the views presented in this article.
About William Frisby
William originally arrived in Beijing as a finance guy on a bicycle and will probably leave as a finance guy on a bicycle. He works for Premium Finance Group (PFG), a financial consultancy that has been established in China for over ten years. PFG offers clients no-nonsense, personalized advice and serves the whole of China from their Beijing and Shanghai offices. Services include international property, investment, insurance and financial planning. To contact William, email firstname.lastname@example.org.