Small children are capable of grasping money management skills easily, if they are taught in the right manner. This is because when they learn the skills early, they sooner they will start applying them as they grow older. Children between 7 and 10 need to be taught simple money management skills by their parents.
The first step is to allocate a meager amount which needs to be given to the child after one week. Assign suitable odd jobs around the house which they can complete in a short period. Once the assigned job has been completed pay them their allowance in full. This way, the child realizes the value of his/her work and will want to earn more.
The next is to show the child how to spend his money wisely. Explain the three important categories that a child should do with his money – saving, charity and spending. Split it as 40-10-50 or 50-10-40, whichever is suitable to you. This way, they learn to spend some of their hard earned money on their favorite things, give away a small portion for others and importantly, save a portion of it so they can use them in the future to treat themselves for the great job that they’ve done so far.
Visualizing a savings jar getting filled up will show how they reap benefits from their hard work; similar to, how they feel when they see sprouts from the seeds they’ve sown with their tiny hands. Give the child a transparent box or jar where they can put in their savings amount every week.
Values like humbleness and simple living can be taught through charity. Take children to some old-age home or orphanage so they will realize how blessed they are.
Now that the financial classes are finally over, take them out buy their favorite toy or dress or video game. These small lessons on savings will remind them to be responsible for their actions and will prevent them from falling into debt traps in the future.
As a parent, use budget planning software offered by personal budget planning websites which you could demonstrate to your kid as he grows bigger. This way, you become an ideal parent for your child, giving him financial security at all times.