Wednesday, March 14, 2012

Financial Education for Children - Teaching Money Management Skills

Isn't it an irony that we teach our children to read and write but disregard the importance of a financial education for them? Isn't imparting and teaching money management skills and knowledge to our children just as important for them to be ready to face the reality of the real world we live in?
Due to the ease of obtaining credit cards these days, there are now more reports of youths in their twenties and early thirties in position of debts than ever before. It is due to such a scenario that it is imperative that children of today are taught to be financially literate with the right money management skills.
The following steps could be taken to educate your children on basic money management:-
  1. Start off by setting up a savings account for them. Give them an allowance, an amount slightly more than their daily estimated expenditure so that they put into their piggy bank that little extra daily. Explain to them that they should put aside say perhaps 10 to 20% of the allowance given. Set them a target to open an account in the nearby bank and later a target monthly savings. Even if that little amount is just ten cent per day, you will be surprise how quickly their savings will grow. The children themselves will be pleasantly surprised. Reward them if they meet their monthly target. This way, good saving habits can be inculcated into them early in life.
  2. Introduce them to the Monopoly and other cash flow games that are available in the market. These games are a good way to educate them on the basic principles of budgeting and the understanding of incomes and expenditures for purchases.
  3. Encourage them to take up part time jobs during their school break to earn some income and extra pocket money.
There are many books written to guide and assist you on a financial education for your children but since this subject is not a syllabus in the most school curriculum, it will be up to you to take the necessary initiatives in teaching the necessary money management skills to them to pave the way for them to gain financial independence early in life.
Jeremy is a firm believer in Financial Planning & that a basic knowledge in Investment is a necessity to achieve your financial objectives. Check out his site Financial Planning Guide for more information.