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Fun Ways to Teach Your Child Money Management

The media is always talking about how the children of today aren’t being prepared properly for the future. And one key area that is lacking in public education is knowing how to manage their money. Here are some fun ways to teach your kids about money.

Educational Gaming

Money Management SkillsVideo games are often blamed for inducing violent behaviour in children, but the right kind of games could actually be teaching them life lessons. If your child has ever played The Sims, a life simulation game, then they could already be learning money management skills.

As the player, you are given a budget to spend on furniture and food for your virtual household. You’re encouraged to get the members of your ‘family’ a job to help boost their income and fund their lifestyle, and career progression is achieveable only by studying on a regular basis. Of course Sims can have a dark side if you choose to use them that way. So it pays to monitor your children’s activity when they create their Sim and how they use it. This may provide a good opportunity to point out the effects of poor choices.

Likewise, a newer game designed specifically to help children learn the value of money has been released on the Apple App Store. Designed by the creator of Shrek, the game entitled ‘Green$treets: Unleash the Loot!’ is aimed at children aged 5-8 and teaches them about money and responsibility through a fun, interactive game. [Editor’s note: A great game that my kids enjoyed is CASHFLOW for Kids by the Author of the “Rich Dad” books.]

Pocket Money

If you give your child pocket money, then you’re already helping them to learn vital money management skills. Encouraging them to budget with a small amount of money each month, or to save up when they want to buy something out of their price range, are both great ways to help them to learn the skills they’ll need in adulthood. There has been a lot of debate over the merit of pocket money, with some believing that too much money skews a child’s perception of the value of money in general. However, the right amount of pocket money is an invaluable way to get your youngsters learning about money management from an early age. The key is to give them enough to practice money management skills but not enough to buy everything they want. This way they learn that money is a scarce commodity and must be handled carefully.

Bank Accounts

These days even children between the ages of 8 and 11 can have their own bank accounts and are even shopping online. Unfortunately, children only start understanding abstract concepts at around the age of 12. So prior to this age money needs to be concrete for them to understand it. However, you can start saving for their college and open a bank account for them prior to this age. Or have them go with you to open an account for them around their 12th birthday.  A year or two later you can get then a debit card attached to their account and finally as they go off to college a credit card for emergencies (with a low credit limit of say $200-$500) so they can’t get into too much debt but can learn to handle it.

Online banking is only set to become more and more common as technologies develop, so teaching children how to access their funds online and how to use the internet for shopping will be useful to them in the future. That’s providing this is taught alongside money management skills, which is something that’s becoming increasingly common in schools. The problem is that it tends to be aimed towards older children, and many fear their kids could be learning these skills too late.

The Future Looks Bright

Despite the media-induced panic surrounding children and financial education, with the right guidance at home and at school, there’s no reason why the next generation can’t produce the most financially literate generation we’ve ever seen. Who knows, your child could even go on to become an accountant, investor,  financial planner,  banker or stock broker.

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