How to Teach Your Children About Money

How to Teach Your Children About Money

Being an adult is difficult. You are suddenly expected to take on a million different responsibilities and that comes with a whole set of worries - one of the main ones being money. So why not let kids have their worry free years, right? Why talk about money? That's what many people think and that's where they are wrong.

The reason why so many of us feel so overwhelmed with financial matters and responsibilities is for this very reason - we were never really prepared for this. Many of us begin handling money for the first time when we move away from our parents or when we start earning. And we make quite a few mistakes before we learn how to manage it.

Teaching your children about financial matters is one of the best things you can do for them.
Here are a few ways you can begin their education.

1. Give them some pocket money. It does not matter how much you give. The point here is to just teach your children to save. When they have enough, you can go with them for some ice-cream or a little treat with the money.

2. Make them take responsibility for their purchases.Take the amount of money you were planning on spending on them and give it to them. For example, maybe you were planning on buying them a school bag or new clothes. You can set a reasonable budget for these items and give your child this amount. Allow them to choose the items they like, provided that they are suitable. If they get the necessary shopping done and have money left over, you can let them keep it. But remind that while you will not take back extra money, you will also not add extra money to the budget. By giving your children the responsibility for their own shopping, you encourage them to make thought out purchases and it's a win-win situation.

3. Use games. One of my cousins played this game at school where everyone was told that they had 1 million dollars. They then had to make decisions on how to spend it by choosing items with set prices. The children enjoyed the game a lot and it let them explore their imagination as well as their money management.

4. Watch videos! There are many videos and movies that teach children valuable financial lessons. Children enjoy watching videos and it can be a great learning tool for them if you let it be, so it's a win-win. Encourage your children to use their screen time watching useful videos and discuss it with them afterwards.

For specific videos your children can watch, check out this post. 

5. When you give Zakat, explain it to your children. You are paying for Zakat on behalf of your children too and it is important that they understand what it is and why we pay it. When they are older, they will have to pay it too so also tell them how. It is also a good way of having them appreciate what they have and encouraging them to use their money to help others as well.

You can read this post on Zakat al-Fitr here to learn more about it

6. Relate your child's Math lessons to real world problems. Students are taught about theories that seem pointless to them, and that they may not know how to relate to real world applications. Division, for example, might seem boring until you relate it to the amount of candy they can eat when they have to share. 

7. Open a savings account in their name and if you are saving money for them, save it there. Encourage them to save there too. Children's savings accounts, like BML's Kids' Saver Account, often pay higher interest rates and this difference can add up by the time your child is old enough to need those savings for college or whatever else. Many banks have these, so look into it!

(At BML for example, the Kids' Saver Account pays 2.0% interest every year and has a minimum deposit of Rf100, compared to a normal Savings Account which pays 1.5% every year and has a minimum deposit of Rf200)