4 ways to teach children about money

A recent report by researchers at Cambridge University (UK) revealed that children's money habits are formed by the age of 7. In this day and age, it seems it's never too early to talk to your child about money. So how do you start educating your child about money?

1. Replace the label “pocket money” with “wages”:

Don’t let your child think that money is made by ATMs instead of real labor. Start paying your child when they help with household chores. They will feel more “grown up” and responsible for the assigned tasks. Instead of giving them free pocket money every day and scolding them for not helping with the housework, give them the opportunity to earn and understand the value of money.

2. Give weekly allowance instead of daily

A week is enough time for your child to not be too comfortable spending money, not having to worry about tomorrow because there is money every day. This time is also short enough for the amount of money we give our child not to be too large compared to giving them monthly. Giving money all at once at the beginning of the month makes it easy for your child to end up in a situation where the beginning of the month is too big and the end of the month is too short, when the child is confident enough to spend money on something too big and then has to ask for support from their parents again at the end of the month.

3. Help your child manage their "wallet"

After teaching your children how to earn money and putting it in their hands, you need to help them manage what they have.

It is inevitable to buy a phone for your child so that parents can contact you to pick them up from school every day. So why don’t we take advantage of the smartphone with simple spending software for children to use and control their small wallets.

If you don't like this method, you can use the old fashioned way, pen and paper!

Many parents share that their family has a small notebook, when children receive money from their parents, they must clearly write down the amount, date, and sign the receipt properly. So children can also have a small notebook to record their spending at the end of the day. When recording their spending, children will easily recognize the effectiveness of their spending. If they don't accidentally buy a dress, they can soon buy a smartphone or instead of going to the movies with friends, they can go out to do something less expensive and not go broke the next day!

This helps children look at their spending habits, helping them learn lessons from their daily actions.

4. The 3 "jars" of money formula: Spend - Save - Give

Many adults start to divide their salary into different packages, some into 5 packages, some into 7. For children, it is of course simpler. The most common formula is to divide into 3 funds including: 40% spending - 50% saving and 10% giving.

The Spending Jar takes up 40% of the money your child has to spend on cakes, candies, going out with friends, and other small things your child needs every day.

The Savings Jar has a maximum ratio of 50% to help children learn how to save and understand the value of saving money from a young age. This jar is not only for the future, for college… but depending on the age of the child, it can simply be for expensive items that the child wants to have such as upgrading the phone, or a good pair of shoes.

The Giving Jar is used to contribute to important family causes, help friends or more importantly, if you can teach your children to do charity from a young age, it will be very meaningful.

By teaching children about money at an early age, they are encouraged to be more careful with their spending, as well as teaching them to set goals and manage their budget. But above all, when teaching children, we must also remember to be strict with ourselves. Don't forget that your children are always watching you and witnessing how you spend your money.