Teaching Kids About Money

I like this article which is about teaching kids on how to handle the money.

By Alvin T. Tabañag, RFP

Author of “Kaya Mo, Pinoy! 12 Steps to Build Wealth on Any Income”

Many parents easily forget about the value of money and spending wisely when it comes to our kids.  We parents tend to give our children the best that our money could buy even though it’s not necessary.  Madalas na dinadahilan ay ayaw natin na maranasan nila ang hirap na naranasan natin noon.  Ironically, it is this kind of thinking that could result in our children leading financially miserable lives later.  If you want your kids to have a brighter financial future teach them the value of money and how to manage it properly as early as possible.  Here are a few tips on how to go about it.

#1 Teach yourself about money first. The most effective way to teach something is to teach by example.  So learn proper money management first before you even think of teaching your kids lest they get infected with your bad money habits.  Pano mo matuturuan ng tamang paghawak ng pera ang iyong mga anak kung ikaw mismo ay hindi marunong?   Learn how to create and use an effective spending plan (aka budget).  Teach yourself expense & personal debt management..  Learn to become a disciplined saver.  Once you have acquired these good money habits then you can start teaching your kids.

#2 Give their allowance weekly instead of daily. Help your kids manage their expenses by giving them their allowance weekly or monthly instead of daily.  They will likely spend all their money in one day if they get their allowance daily because they know they have something to look forward to the next day..  Sa simula hindi madali sa anak nyo na magbudget at maaring isa o dalawang araw pa lang ay kalahati na lang ang natitira sa allowance.  So, it’s important that you closely monitor how your child is spending his/her allowance in the first few weeks or months so you can help him/her make adjustments to ensure that the money will last until the end of the week or month.

#3 Get them started with regular savings. Encourage your kids to save a portion of their weekly or monthly allowance.  To motivate them to save you can implement a “matched savings” program wherein you match whatever money is left from your children’s allowance and add it to their savings.  Halimbawa, kung P100 ang natira sa kanyang allowance sa isang linggo, dadagdagan mo ang kanyang savings ng P100 – for a total savings of P200 for the week.  With a matched savings program in place, your child can easily save thousands during the school year.  Every few months, let them deposit their money in a bank account, one that comes with a passbook, so they can clearly see their savings growing.  Nothing inspires more than seeing the positive results of one’s efforts.

#4 Teach them to wait & save for something before buying it.  Impulse buying has left countless of people trapped in a lifetime of debt. Teach your kids to become smart spenders and show them how to make each peso count by planning for each major expense.  Kung meron siyang gustong bilhin na may kamahalan, pag-usapan ninyo kung kailangan ba talaga.  If you think it is not a necessity you can let your child pay for it in full using money from his/her savings.  Or you can split the bill 50-50, 60-40 or 40-60.  Resist picking up the tab even if you can afford it.  For really expensive items, help them come up with a plan to save for it even if their current savings can already cover the amount.  This will teach them the value of saving first instead of buying outright.  My daughter has a 3-year savings plan to buy her own netbook even though she has sufficient savings to buy it now.