The frequent question that comes to our mind is that – “How to handle finances with our kids” or simply put, “How to raise our kids money smart”?
We may begin by establishing long and short-term savings goals for our children. In general, goals should be as straightforward as possible, taking into account the child’s age, interests, and the time it will take them to get there. So, for primary-age children, their short-term goal may be something little, like getting a racing car toy or Barbie dolls, while a long-term goal could be a Lego set. For middle-school students, the short-term goal may be footwear or a stylish outfit or going to a 3D movie, while the long-term goal could be cricket sports kit or a gadget such as a smart watch or a video game (we need to note here that smart phone is never a cool gadget for kids of this age).
You can also motivate your kid to start an allowance system at home. That means giving them a glass jar to put-in the money or coins that we give them to save to do the purchase for their future goals. However, we need to keep in mind that no single system works for every kid. So we need to adjust the tasks accordingly to our kids’ style. You may divide the money-allowance that you give to your kids into different categories for spending, saving, investing, and charity giving, etc. Alternatively, you could also link the money allowance to the household tasks done by your kid (such as cleaning their cycles, mopping up their shelf, etc.).
Kids generally will be ready for these kinds of money-related tasks once they reach the age of 5 or 6 and above. When we try to impart these kind of money-knowledge to our kids at the early stages of their life, it shall reflect well in their adulthood as well when they reach their colleges or jobs an shall influence their circle of competence and friends to be money-smart as well, which will create a wider sensible money behavior of all in their circle.