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Money Management: Tips to Educate your Kid

kids money mgmt
ASNB
ASNB Academy

6 min read

Teaching children to manage their money is a valuable skill that can set them up for financial success throughout their lives.

Here are some practical steps and tips to help teach kids about money management:

Steps to Teach Kids About Money Management

1. Start Early: Introduce basic money concepts at an early age. Use age-appropriate activities and discussions to build a foundation for financial literacy.

2. Set a Good Example: Demonstrate responsible money management through your own actions. Kids often learn by observing their parents.

3. Give an Allowance: Provide a regular allowance to help kids learn how to manage their own money. Decide on an amount and frequency that are appropriate for their age and your family budget. For example, tell your children their school allowance is RM25 a week and put the money in a container. Let them decide how much they need each day, but the money cannot be added if it is used up. Over time, they will be wise to manage money so that it does not run out before its time.

4. Teach the Value of Work: Encourage kids to earn money through chores, part-time jobs, or small tasks. This helps them understand the relationship between work and earning.

5. Introduce Saving: Teach kids the importance of saving by setting up a savings account or a piggy bank. Encourage them to save a portion of their allowance or earnings. Explain the importance of saving by giving them funds and opening an account such as Amanah Saham Bumiputera (ASB). ASB can be opened for the newborn. Please encourage them to save in ASB by sharing their investment progress each year. The myASNB application will help you manage their investments easily because the child's account will be displayed in the registered guardian's account.

6. Set Savings Goals: Help kids set short-term and long-term savings goals, such as for a toy or a special outing. This teaches them to plan and prioritize. You can also encourage your children to save by setting a goal together. In addition to investing, medium-term goals include buying a dream game, enjoying a favorite meal, or an outing with friends.

7. Teach Budgeting: You may feel it's too early to introduce a budget. Still, a budget is a simple way for them to record income (allowances), savings, and expenses. This way, they can monitor how they use and manage money.

8. Discuss Needs vs. Wants: Help kids differentiate between needs and wants. Discuss how to prioritize spending on essentials before splurging on non-essential items.

9. Use Real-Life Examples: Take kids shopping and involve them in financial decisions, like comparing prices or using coupons. Real-life experiences make lessons more relatable.

10. Teach About Giving: Encourage kids to set aside a portion of their money for charitable giving. This fosters a sense of empathy and social responsibility.

11. Introduce Investment Concepts: As mentioned before, teach your children to invest, for example, in ASB. Explain that investing will help grow their money through dividends received and teach them the concept of risk and return and the power of compound interest.

12. Discuss Credit and Debt: Explain the basics of credit, loans, and debt. Teach them about the importance of borrowing responsibly and the consequences of excessive debt.

Practical Activities and Tools

  • Allowance and Chores: Provide a regular allowance in exchange for completing chores. This teaches the value of work and earning money.
  • Savings Goals Chart: Create a visual chart to track progress toward savings goals. This makes saving more tangible and rewarding
  • Budgeting Apps: Use kid-friendly budgeting apps or tools like Greenlight or FamZoo to teach budgeting and money management in an interactive way
  • Money Jars: Use jars or envelopes labeled "Spend," "Save," and "Give" to help kids allocate their money
  • Board Games: Play board games like Monopoly or The Game of Life that involve money management and financial decision-making
  • Real-Life Shopping: Take kids shopping and involve them in making decisions about spending, using coupons, and comparing prices
  • Interest and Growth: Teach kids about the concept of earning interest by offering a small "interest" on the money they save at home.

Conclusion

Teaching kids to manage their money equips them with essential life skills that will benefit them throughout their lives. By starting early, setting a good example, and using practical activities and tools, you can help your children develop healthy financial habits and a strong foundation for future financial success.