The following is a guest post by Marc Brown, a financial writer who covers a variety of topics ranging from debt settlement to bankruptcy.
Inculcating the habit of managing money among kids is an important practice for all the parents. If the kids are taught to handle money in the right way then they can avoid facing financial hardship while they attain youth. In this way they can achieve a secured future that would be untainted by debt. If the kids fail to manage their monetary responsibility then they would be going through a traumatizing experience of debts. Kids usually have high adaptive power therefore if they are given an appropriate training then they would be able to cope with monetary issues from a young age.
Essential money management tips for kids:
Teach kids to save money. The amount that is saved might be small but one needs to instill value and discipline by teaching the kids to save money. Parents have a moral responsibility to impart good education therefore start a savings account for your school going kids when they attain the age of 9 or 10. Allot pocket money for them and ask the kids to put away a stipulated amount by making a monthly target. This habit would help them to hoard a hefty amount by the time they reach adulthood.
Design a budget plan. It is not only essential to plan a budget but you need to enlighten the kids the importance of budgeting while financial management. Instruct them to write down the basic monthly expenses and the amount that has been allocated for a particular stuff. This would help them to trace the amount they managed to save from their pocket money after dealing with the monthly expenses. Try to maintain a document where the kids can pen down the price of the stuff that they intend to buy or have bought mentioning along with the source of income. The budget pattern would help to impart an excellent habit of spending a right amount as well as budgeting.
Give them a prepaid credit card. Giving the kids a prepaid credit card would be a good option as there would be less hassle. You can ask your credit card company who can help you by connecting your kids’ card with your existing card. This would help to keep a check on the amount the kids are spending as the monthly updates are available. The prepaid credit card has an advantage as you can deposit a fixed amount that you consider to be reasonable that they can afford to spend. You can get a general idea of the amount that has been spent. This would help to teach the kids a prudent way to use money. Just be sure they can’t exceed the prepaid amount on the card.
Create a checking account. If you are keen to make your kids financially well aware then it would be ideal to help them to create a checking account. There might be special programs for kids that would be offered by banks. You need to teach the basic to the kids that include writing and maintaining a record of checks as well as verify the statements.
If you want to make the kids aware of the importance of managing money then you need to restrain yourself and avoid granting wishes that your darling son or daughter makes every time! You might come across innumerable problems while teaching your kids the trick of money management but there would be a noteworthy result at the end. This would pave the path for a debt-free life for your kids.