Last Updated on April 13, 2017 by Marie Bautista
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When do you start teaching your child about money?
Teach her as soon as she understands that she can use the money to
buy the things she wants. When she shows some interest, you can start teaching her how to handle it wisely. The simple lessons you teach today will give
your child a good base in financial literacy.
buy the things she wants. When she shows some interest, you can start teaching her how to handle it wisely. The simple lessons you teach today will give
your child a good base in financial literacy.
LESSON 1: EXPLAIN THE MONETARY SYSTEM
Very young children think that the coin is better than the paper bill and more paper bills are better than less paper bills.
My then three-year old daughter preferred a 10 peso coin to a P20 bill
and she thought 3 pieces of twenty pesos are a whole lot more than a hundred
pesos.
My then three-year old daughter preferred a 10 peso coin to a P20 bill
and she thought 3 pieces of twenty pesos are a whole lot more than a hundred
pesos.
I personally think we should start exposing our children to
money early. Not so early that they do
crazy slash dangerous things to the coins like put them in their mouth (there
is a stage when kids love to put stuff inside their mouth or their nose or
their ears. When they are this age,
please get rid of tiny things they can easily grab! I have heard a story about a pencil eraser-that little cylindrical eraser on the tip of a pencil being found inside a child’s nose! I am digressing again…), though.
money early. Not so early that they do
crazy slash dangerous things to the coins like put them in their mouth (there
is a stage when kids love to put stuff inside their mouth or their nose or
their ears. When they are this age,
please get rid of tiny things they can easily grab! I have heard a story about a pencil eraser-that little cylindrical eraser on the tip of a pencil being found inside a child’s nose! I am digressing again…), though.
LESSON 2: GIVE YOUR CHILD AN ALLOWANCE
Set a budget. An
allowance gives your child her first brush with finance. Some kids
go crazy when they get their money that they spend all their money and try to
make libre all their friends (This probably is one of the stories my dad loved to tell people – the day he found out I was treating all my friends in second grade and concluded that I would be a politician!) Before giving your child the chance to have her own allowance, teach her on how to budget and save for something she really
wants to have so badly. And if she spends her one-week allowance in a day, be a tough mom. Don’t switch into Rescue Mom mode and give
her extra money. If you do give her extra, make her work for it.
allowance gives your child her first brush with finance. Some kids
go crazy when they get their money that they spend all their money and try to
make libre all their friends (This probably is one of the stories my dad loved to tell people – the day he found out I was treating all my friends in second grade and concluded that I would be a politician!) Before giving your child the chance to have her own allowance, teach her on how to budget and save for something she really
wants to have so badly. And if she spends her one-week allowance in a day, be a tough mom. Don’t switch into Rescue Mom mode and give
her extra money. If you do give her extra, make her work for it.
Which brings us to…
Pay for chores. Suze
Orman in The Money Class: Learn to Create Your New American Dream
insisted that children should not even be
receiving allowance. They should learn
to work for it by doing some ordinary and special chores around the house.
Orman in The Money Class: Learn to Create Your New American Dream
insisted that children should not even be
receiving allowance. They should learn
to work for it by doing some ordinary and special chores around the house.
I give my children allowance though, and when
it comes to chores, I only pay them when they are not the ordinary household
chores (since doing them is a part of their responsibility as a member of the
family), but they do get extra for some special household chores.
Reward. I reward good
grades with money. Some insist this is
not good, because it is a child’s responsibility to study hard and have good
grades, but I love the way my kids look when they get rewarded for their hard
work and I know they will always try to duplicate their efforts if they are expecting some kind of reward.
grades with money. Some insist this is
not good, because it is a child’s responsibility to study hard and have good
grades, but I love the way my kids look when they get rewarded for their hard
work and I know they will always try to duplicate their efforts if they are expecting some kind of reward.
LESSON 3: INTRODUCE
THE IDEA OF SAVING.
THE IDEA OF SAVING.
Who didn’t have a piggy bank? When I was a little girl, I had a coin bank
(it sure wasn’t a piggy) shaped like a house.
I think it was Metrobank’s giveaway way back then and it had a special
quote on it too: it says “A peso a day
will build a house someday.” That quote
meant a lot to me back then (which sadly went to waste when I discovered
shopping ! )
(it sure wasn’t a piggy) shaped like a house.
I think it was Metrobank’s giveaway way back then and it had a special
quote on it too: it says “A peso a day
will build a house someday.” That quote
meant a lot to me back then (which sadly went to waste when I discovered
shopping ! )
My son has his own piggy bank now. We keep track of how much he puts in his
piggy bank by letting him write in his journal book how much he deposited (this
will sharpen his math skills as well), and I told him when his savings reaches
P1,000.00, we will open his piggy bank, count the coins and…
piggy bank by letting him write in his journal book how much he deposited (this
will sharpen his math skills as well), and I told him when his savings reaches
P1,000.00, we will open his piggy bank, count the coins and…
Open a bank
account. Choose a bank with programs
that help kids learn financial basics. Explain
to your child how “free money” goes into her account through interest.
account. Choose a bank with programs
that help kids learn financial basics. Explain
to your child how “free money” goes into her account through interest.
Share. Teach your child the value of sharing by withdrawing
some money every month to give to charity.
In this situation, explain that the loss of interest income is not
important because of the help she is giving.
some money every month to give to charity.
In this situation, explain that the loss of interest income is not
important because of the help she is giving.
LESSON 4: SET
TARGETS.
TARGETS.
Agree on targets to be saved each day, week or month. This is a good time to teach your older child
the difference between short-term and long-term goals. The younger child won’t be able to set
long-term goals yet, though.
the difference between short-term and long-term goals. The younger child won’t be able to set
long-term goals yet, though.
Set limits. It is difficult for children to set targets
especially for savings. Show her the
limits of what you can give her for her needs and wants. Explain to her that the difference will have to come
from his savings.
especially for savings. Show her the
limits of what you can give her for her needs and wants. Explain to her that the difference will have to come
from his savings.
Set a goal. When your
child receives money gifts, discuss what she wants to do with her money and give
suggestions, always including the benefit of saving. Show her how to divide the money gift for
different purposes. Have a picture of
the item that your child wants in her target chart or on the piggy bank. Show how long it will take to reach the
target based on the agreed daily, or weekly, or monthly savings. Include a small amount to spend right away
depending on your child’s personality.
Remember, the final decision should be acceptable to her.
child receives money gifts, discuss what she wants to do with her money and give
suggestions, always including the benefit of saving. Show her how to divide the money gift for
different purposes. Have a picture of
the item that your child wants in her target chart or on the piggy bank. Show how long it will take to reach the
target based on the agreed daily, or weekly, or monthly savings. Include a small amount to spend right away
depending on your child’s personality.
Remember, the final decision should be acceptable to her.
If your child does not reach her goal, just keep
trying. Children are smart. You will just be surprised one day that your
child has learned to become a disciplined saver.
trying. Children are smart. You will just be surprised one day that your
child has learned to become a disciplined saver.
Finally, keep this entire exercise light. It will be even more difficult for your child
if you are uptight. Remember, you have
many years to do all these. Both you and
your child will be happy with this shared experience. Plus, be a good example. You cannot expect your child to be thrifty
when shopping is your passion (don’t look at me…I am on my road to recovery, I swear).
if you are uptight. Remember, you have
many years to do all these. Both you and
your child will be happy with this shared experience. Plus, be a good example. You cannot expect your child to be thrifty
when shopping is your passion (don’t look at me…I am on my road to recovery, I swear).
On a last note, you can start your kids early on the stock market and introduce them to the greatest gift of Einstein to us (nope, it was not that E=MC squared) – the magic of compounding! Join us and let the Truly Rich Club be your partner on your journey to becoming TRULY RICH!
Great tips Mommy! I bought a toy at the same time time a coin bank for my son and ask him to drop the coin inside. The purpose was not really teaching him to save but to improve his fine motors by letting him shoot something in tiny holes. I hope someday when he already understand what a coin or money is I'll definitely allow him to continue saving in a coin bank and later when he's old enough I'll let him do the deposits in his Junior Savings account.
When I was a child, my dad always taught me how to save. Why is it that it's hard for me to apply it now. Hahaha. :p
I have started teaching my kids about money since they were 5. They each have their own bank account and they save money too every chance they get.
Setting a goal is most likely the important thing for me as its mostly something I lack – I know what to do, acknowledge things but mostly, I like the goal part. so I think that's really important.
Your tips are excellent for the growing up years of a child. And, I think you have teach them too on how to be young entrepreneurs.
Teaching them to save helps them appreciate the value of money and it sticks to them when they grow up.
this is a wonderful to teach our kids, we can't just give them money so they would value and work for it, thanks for sharing this information, very helpful.
Both of my kids have piggy banks and when it is full we will put it in their own bank accounts. This way they will learn how to save even it is just a penny or dime. The money saved will go to their college tuition someday.
me totally agree! 🙂
I remember my lolo used to say when we were kids..
"piso, kada 1 puting buhok!"