Wednesday, August 25, 2010

How do you teach your child to manage money?

Sentuhan Bayu: My eldest one is 4 years old & barely understand what is money. But I find this article useful. I think I'll go with the allowance approach.

26 July 2010

Boxes for budgeting
For the older ones, I just give them instructions on how to budget their money. With the younger ones, I give them boxes and I tell them how to divide up the money. So I tell them that one box is for spending (10% of their allowance), another box is for future spending (another 10%), another box is for play (10%), for gifts (10%) and the rest might be for necessities. So they each have about five boxes in which they divide their allowance. This way, they know how much they can use and from where it's coming from. I've told them if the money is in the play account they can finish it; if it's for future spending they have to save up for what they want. - Cafflin Wee, mother of three girls and one boy aged seven to 16

Starts with allowance
They get a weekly allowance and they seem to handle their money quite well in the sense that they know how much to spend at school each day. Other amounts of money like ang pow (red packet) money, I would normally keep for them in their bank account. They get a maximum of RM10 in the wallet and with my younger one it's nothing more than RM5 because somehow at school they end up lending money to their friends. I don't want him walking around with too much money in the pocket. This doesn't mean I tell him not to help friends if they do need some money and they're really, really starving. I just want him to be careful. The older one buys things and the younger one tends to keep the money to buy something bigger. - Michelle Nunis, mother of two boys aged eight and 11

Coin boxes and savings accounts
As my parents had taught me how to save money from young with coin boxes, so have I practised with my own children. Ever since they started school, the younger ones have received pocket money every day and I would ask them to save. No matter how little the amount, they would be encouraged to put it aside in their coin box. The older ones get pocket money every week now and they will have to spend wisely or budget so that they do not use up the whole amount early in the week. Otherwise, they would not have enough money to spend later in the week. If they need to purchase anything other than food in school they will have to save up on their own. For example, if they want to top up their phone credit. Each child also has their own savings account and the money saved up in their coin boxes will be put aside in their account. - Nurwina Mohd Som, mother of four aged eight to 20
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