How to Teach Children to Manage Money

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With the same income, some manage to save money and regularly make large purchases, while others are bogged down in debt and loans. Financial literacy (or lack thereof) definitely affects the lives of adults. The good news is that it can be instilled from childhood.

Teaching children how to handle money is actually not difficult. The only question is whether you are ready to spend your time and energy on it. It is better to start at an early age.

According to a 2013 study by Cambridge University researchers, financial habits are already formed by the age of seven, and children are able to form a basic understanding of money as early as three years old.

The process of learning financial literacy is easier in a game form, notes Jim Brown, a venezuela whatsapp list financier with 30 years of experience and a father of two, and shares his proven methods.

Play the game "Let's go to the store"
This game is usually interesting even for preschoolers. You can set up an improvised store in the living room or on the street, be sure to display goods with price tags and equip it with a toy cash register with "money".

Let one child take on the role of the buyer, and the other one will be the cashier. At first, it is better for adults to be nearby to help the children and answer any questions they may have. Usually, children master this game quite quickly and begin to cope on their own. Role-playing a shopping situation allows you to hone some math operations and budgeting skills. It also helps children talk more freely with each other about money.

Play the game "How Much Does It Cost?"
Sitting at a table, the participants — including adults, at least at first — take turns showing each other randomly selected goods and offering several options for their approximate cost. The task of the others is to name the correct price (the cost of goods and services in the examples given in the text is given taking into account Russian realities. — Ed. BP ).

You can ask, for example, how much it costs:

half-liter bottle of drinking water - 10, 40 or 200 rubles?
movie ticket - 50, 300 or 1500 rubles?
mobile communication services per month - 100, 600 or 3000 rubles?
a new economy class car in basic configuration - 150,000, 600,000 or 1,200,000 rubles?
This game and others like it help children understand the cost relationship between different products and services.

Give out a certain amount regularly
One of the biggest mistakes adults make is giving their child unlimited access to their parents' financial resources. It will be easier for a child to learn to plan their purchases and, if necessary, save money for them if their parents start giving them a set amount periodically. For example, a child can receive 200 rubles once a week. This amount will increase by 50 rubles each time the child becomes a year older, and also provided that during the week they have done something good, for example, helped someone or got an A on a difficult math test.

Of course, there are no set rules for how much money you should give your child. It depends largely on your income level and expectations about what your child can do.

The lack of financial restrictions often harms children in the future. Thus, children who are accustomed to guaranteed additional financial support from their parents are more likely to rely on additional financial sources in adulthood and may abuse credit card payments.

Learn how to budget
The easiest way to teach a child to make a budget is to do it together first. Children often invite each other to visit, including when they are going to celebrate their birthday. Set a reasonable budget for a gift and help your child choose something that will fit into this amount in terms of cost. It is easier to search for the necessary goods on the Internet, where you can also compare prices for the same thing.

Show how money can work
Sooner or later, your child will probably save up some money that can be put into a bank account. Explain to your child that now their money is working. Of course, this phrase may be too abstract for them, so it is worth explaining in understandable terms how money kept in the bank brings in additional money in the form of interest (passive income) and how the amount in the account is constantly increasing (savings). Understanding this and the habit of saving money will serve your child well.

Encourage charity
Parents who regularly donate to charities or non-profit organizations set an excellent example for their children and, at the same time, protect them from selfishness and greed.

Once your child has saved enough money, you can show them a list of charities and choose the one with the mission that is closest and most understandable to them. This is a great way to teach them kindness, sharing, and how money — be it 50, 500, or 5,000 rubles — can be useful.