It is really important that the next generation know how to look after their money properly. We do not want a country where young people have lots of debt, find it difficult to manage on the money that they have and feel unsatisfied with what they have. However, if we teach our children form a young age, how to look after their money and make sensible spending decisions, then this should help them as they get older.
Let them make unwise purchases
It can be really difficult when you see your children ‘wasting’ their money on things like sweets or toys that you know will not last long. However, it is important to let them do this at least once. Allow them to make quite a significant purchase and then talk to them afterwards about the consequences of this. Show them what else they could have got with their money and talk to them about the difference between necessities and luxuries. Hopefully it will lead them to make more sensible spending decisions as they get older.
Give them a money box and bank account
It is really important the children understand about saving. Often children want to spend money as soon as they receive it and then they think that this is what they should always do. This means that when they get paid, they spend the money quickly and then have nothing left if they need it before the next pay day. Therefore show them how good it can be to save money. Encourage them to put money in a money box and every so often pay it into a bank account. Explain to them about how they get interest on it for the bank and this will help their money to grow while the bank looks after it for them.
Explain to them about benefits of savings
It is important for children to understand why saving money is good. Often they can make decisions which only affect them here and now, but they need to know more about the future. Explain to them that if they save up each week or month, then they will be able to afford more expensive things and also have money if they really need it for something.
Show them your household expenses
It can be really useful to let them understand your household expenses. Explain to them all of the things that you have to pay for from mortgage or rent and utility bills to food and transport. They will start to understand why it is important to manage money carefully.
Give them money to manage
It can be a good exercise to give them responsibility for managing money. You could give them money each month and make them responsible for buying their own things such as clothing, new school supplies and things like that. An alternative is to give them a weekly food shopping budget and see if they can plan a sensible shopping trip which is within budget and will provide enough food for all of the meals in the week.