Teaching financial management to children with 9 applied techniques

Money is essential to meet the needs and wants in our society, and everyone needs financial management skills. These skills are derived from the beliefs, attitudes, habits, and values ​​we acquire about money as children and grow up. 

Financial education is essential for everyone. 

Children who learn to plan and execute their expenses will have more confidence. In addition, they are more confident and self-reliant than other children in their decision-making abilities. 

They can do it sooner with critical economic concepts like credit, taxes, and insurance to know each other and start investing in their future lives. This article will introduce you to the practical methods and techniques of teaching financial management to children.

How do children learn?

Children’s readiness to learn depends more on their interests, abilities, level of understanding, and needs than on their age. Parents who are aware of their children’s learning methods can create valuable learning opportunities for them from an early age.

1. Teaching financial management indirectly using observation and example

Children see what their parents do with money and how they feel about it; what children see and hear influences their attitudes and values ​​. 

For this reason, parents should evaluate their attitudes about money and the methods they use to spend money.

Do you always try to live up to your financial obligations? 

Are you calm about financial matters, or do money cause conflicts and emotional outbursts? Do you spend your money on whether or plan to spend it?

2. Participate in discussions and decisions

Parents can help their children understand financial matters by involving them in routine family discussions. This allows children to gradually understand what the family income is spent on and what the family’s short-term and long-term financial goals are. 

Children who understand the family’s financial situation are less likely to have irrational financial demands than other children.

You need to set the rules for these family reunions and clearly define how your child should participate. In addition, you should emphasize the importance of the confidentiality of these family discussions and ask the child not to share the issues raised in private family meetings with others.

3. Direct financial management training and planning of opportunities and experiences

Sometimes you need to plan for an opportunity to teach your child a particular lesson. For example, when you “shop” with your 7-year-old, you can teach him the difference between the value of a 50 toman coin and a 100 toman coin. 

Or you can search with your child on product review websites and ask them to help you find and read consumer reviews about buying a bike.

Remember that your child learns more from fundamental interactions and experiences than from the decisions made after your one-sided speeches and conversations.

4. Creating opportunities for real choices and decisions

We all learn everything by doing it. When parents give children the chance to choose how to spend money (according to their age and stage of puberty), children learn a lot.

Sometimes their choices are indeed wrong, but in these cases, parents should guide and support their children instead of making fun of them and always open the door to dialogue.

What should the child learn?

1. Financial constraints and choices

Every kid should learn that the amount of money is limited, but the wants and needs have no end. 

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He must know that because of the limited amount of money we have, we must choose how to allocate our money to our wants and needs to achieve the highest possible satisfaction. Help your child learn the following:

Live within your financial constraints.

Make changes when he has little money.

Accept the consequences of your decisions.

Knowing these things will help your child learn a successful life.

2. The importance of opportunities, setting priorities

Choices are essential because when we spend money on something, we can no longer pay it on other attractive options and therefore miss opportunities. 

So, we always have to spend money on the most important things. In the process of assessing what the child’s limited money should first be spent on, they should:

Learn to prioritize his desires.

Learn to distinguish between important things and things that are not important.

Understand that needs and wants are different.

Tell your child how you make choices based on the values ​​and goals behind your decisions. The child should have opportunities to make choices (with parental guidance and support).

Successful choices allow you to admire your child and share in their happiness. Of course, some of the child’s options are not wise. 

Then help her assess where things went wrong and encourage her to make future decisions.

3. Saving and making the best use of money

The child must learn that if he takes care of the equipment and things he already has, he can meet more demands with his little money. 

He must understand that the money spent on replacing toys or clothes lost or damaged due to misuse cannot be spent on buying new and exciting things.

In addition, you can find many opportunities to teach your child the benefits of becoming a good citizen through example and discussion and to teach them to protect scarce resources and avoid wasting and wasting. 

For example, walking to a store near home instead of using a car positively affects the environment and your costs. 

Not using a car reduces air pollution, gasoline consumption, and transportation costs.

Teach your child that the proper use of time and skills will lead to  better use of available money. 

For example, changing the shirt’s buttons or sewing a new fringe on the skirt means that we do not need to buy a new shirt or skirt. So, we can spend the money left over not replacing this dress on other suitable choices. 

In addition, you will teach your child daily life skills that will be useful to him throughout his life.

The child needs to know that he does not have to spend a fortune to satisfy every desire, and sometimes he can use his creativity. For example, he can make his own friend’s birthday card or design clothes for himself using the discarded clothes of other family members. These activities stimulate the child’s creativity and, in addition, make the child aware of the benefits of available resources.

4. Set goals and plan for spending money

When a child is old enough to receive money (usually between the ages of 7 and 9), it is time to help them plan to spend the money. The program should be simple, and the child should be able to understand it and be based on goals that you both agree on. Setting goals and planning helps you decide on the amount of money your child should pay.

For example, if your child has to pay for lunch at school, is a member of different groups, or participates in various programs regularly, you both need to agree on a reasonable amount of money for these fixed and predictable expenses. 

Talking to your child will allow you to explain to them how spending money on these activities is in line with your values ​​and goals.

In addition, you have to decide on a certain amount for variable costs. Variable costs are costs associated with things that are not necessary but are desirable, such as entertainment, snacks, and entertainment expenses that allow your child to experience choosing and living on a limited budget. The amount of money you pay and the degree to which your child is independent in making decisions depends on their maturity and level of experience.

This is an excellent opportunity to teach your child to save a small amount of money for an emergency fund. Your child should learn to protect money for emergency phone calls or bus fares.

5. Save and help others

Every child needs to learn how to plan for saving, helping others, and shopping. Planning to save money for the holidays, buying birthday gifts, helping those in need, or saving money for a week to buy expensive things will help your child develop essential habits for their future life. Earn.

Saving money first comes to a child when their money is not enough to buy what they want. So, the child has to save part of their money for 2 or 3 weeks to buy it. You can teach your child how to run a savings plan by giving them a piggy bank or an envelope to hold the money until it is raised.

Teach older children to run more extended savings plans by helping older children open a savings account at the bank. Also, teach him to deposit savings regularly into his savings account in person or online.

6. Consumer skills

Acquiring shopping skills is a lifelong investment that begins with teaching a 4-year-old the fact: 

Unless he pays for candy, he cannot have it. The following are essential skills that your child should first look at in your behavior before they are given a chance to make decisions.

7. Comparative shopping

Finding the right quality at the best price is an important skill. You can start teaching this skill by explaining to your 7- or 8-year-old why you chose one item over another in the store.

8. Search for relevant information

As your child gets older, encourage them to pay attention to price and quality information before making significant purchases.

You can go to different stores, use newspapers, telephones, or read product reviews in magazines and websites to get this information.

9. To borrow

The fact that borrowing reduces the amount of income we can spend in the future is essential. If you want to lend money to your child, it is better to lend him a small amount to it will not be difficult for the child to repay it. Insist on having a plan to repay the money and stick to it.

Your child at 10 or 11 can understand that lenders are receiving interest, So the amount he has to pay increases. Learning how to calculate interest costs and being required to pay them will familiarize your child with real-world loan costs.

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