So, we went to the mall the other day and passed a toy store. My son saw a toy he wanted, and I knew he has many of these types of toys. Naturally I tried to stall this by saying; I didn't have any money. Big mistake !!!
He simply said, "Dad, just use the ATM to withdraw money". Not his fault, I hadn't taught him the value of money.
I realised it was high time I started teaching him the value of money and how to manage money.
Giving pocket-money to your kids is a great way to introduce money management to your children. Always make sure that, the pocket-money you are giving is age appropriate.
I set him a pocket money budget of AED 10 per week. It looks small on the face of it, but it is a great way to start him thinking about the value and importance of money management.
I make sure I never increase the amount or give any additional money within the fixed period. This is money he can spend in any way he wants except on online games or video games. These are no-no at the risk of addiction.
I don't buy him everything that he takes a fancy to, as this will spoil. Instead I ensure he child agrees to a budget before we go for shopping. For instance, let’s consider the agreed budget is AED 100, I tell my son to pick up anything he likes within the budget we have fixed.
Through this, he will not only develop a habit of comparing prices of objects and the value attached to them, but also helps him improve on his mathematical skills.
Giving money to children after completing certain work is good. But I do not reward him for things like doing homework or showing good behavior.
I know that if I give money for things which he is supposed to follow on daily basis then he will do it just for monetary gains.
I make him understand the difference between doing work and completing homework.
Like all parents, I want the best for my son, but I draw a line between his needs and wants. If I give in to all his demands today, he will turn out to be a spoilt child and suffer when he grows up tomorrow.
When I say no to his demands, I make him understand why I refused to buy him what he asked for. I know my answers might temporarily affect him, but eventually he will realize what I did was right.
Since my son is 11, I try to discuss our financial matters with him to an extent that he can understand them. I talk to him about the advantages of saving money, our liabilities and investments.
I give examples from real-life stories to help him relate to these concepts easier. I tell him about the plans that I have made for his future like college education expenses, etc...
Many children are very curious to know what is happening around them. So I make sure I keep my mind open for all his questions and answer them patiently.
Children learn certain habits by observing their parents. Hence, it’s very important for you to do what you say. I pay our bills on time, spend smartly, and manage money well, so my son will also follow in my footsteps.
While teaching him about finances, I always make sure that I keep it simple and fun so that he takes it positively.
A wallet is the simplest way you can teach short-term money management to your kids, and a piggy bank is a wonderful way to develop money-saving habits in children.
The wallet I gave him makes him aware of how much or how little money he has in his possession and encourage him to work for money when he wants to buy something he likes.
My son loves to fill up his piggy bank with money he gets, especially coins. The most fascinating thing is, he is now able to understand the value of money that goes into his piggy bank and does not like to give it away easily.
On the other hand, I sometimes agree to give him some money for completing a task such as cleaning up the room or helping in everyday household work. Through this, he understands the true value of money. I make sure that the money I give goes into the piggy bank and not spent elsewhere.
Once he grows up, I will encourage him to open a bank account. This will expose him to the concept of banking.
Ask me a question about any topic related to your financial goals.
Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.
He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.
He helps business owners and professionals ‘Create A Second Income’ through investments.
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