The sooner you teach your child about money management, the better. Managing money is a process of saving, budgeting, consumption, recording, and investment, and it is also difficult for adults. It is therefore very helpful to teach your child early on money management and share their ideas.
One of the most important things in life is the ability to know about money. If your child is helped to develop financial management skills from a young age, you can cope with the financial problems that arise when you become an adult.
An article in ABC News explains the need for and education of financial education for your child.
The study, published by the Consumer Affairs Journal, shows the development of savings skills for children aged five to six. A study conducted by an action specialist at the University of Cambridge in England also suggested that children could understand the value of money when they were 7 years old and could implement complex financial management practices such as making a money plan or suspending consumption.
"One-sixth of the world's parents want their children to know about the economy," said an accounting firm M & G. "But I feel confident that they themselves are ignorant."
"Children's spending habits and ability to manage money are greatly affected by their parents," said a researcher at the University of Cambridge in England. Parents, therefore, should demonstrate good economic habits and try to explain and comment on economic concepts early on.
In order to educate a child about responsible consumption and savings, it is necessary to understand the basic concepts of money. The following five concepts are essential for your child's financial management education.
1. Money is a limited resource
If your child understands that money is a limited resource and that if you can not manage money, you will have negative consequences, let us know about the concept of saving or budgeting. One of the best ways to get kids interested in economic issues is to make a little money every month to give them pocket money or help with housework.
When children have the right to use money, they can understand the value of money and have critical thinking. For example, a child who has spent his money on toys in the beginning of the month can not buy anything in the future, and learns to wait until next month. This method can tell your child about wise and frugal consumption.
2. What you want and what you need
One study suggests that giving children money can help them to manage money, but it is also helpful to give advice on consumption and budgeting.
Describe the concept of 'what you want' to your child, for example, new toys, latest smartphones, and new video games. On the other hand, 'what we need' tells us that we are the house and food we need to survive.
The child needs a new △ toy △ clothes △ a need to go to school △ the concept of household goods can be a little difficult, so to understand this concept, you should tell a story or assume a situation It is good to let them know.
Of course, this is helpful, but there are still areas of ambiguity. We have to let them know that we do not need to buy expensive clothes, cars, or smart phones. It's a good idea to talk about these topics when shopping, watching magazines or watching TV.
3. Delay Satisfaction
Many adults have become indebted because they have not delayed their satisfaction. To tell the children about this, let's say you only spend money on the food, clothes, and travel expenses you need.
If you have something you do not need, such as toys or video games, that you want to buy, let the children ask you to settle for your allowance. If your child does not have enough money, you have to tell him to wait until he can live. Through this education, children's purchasing decisions will change and they realize that they do not have to buy toys with the limited money they have.
Once you have done what you want and need, you should teach budgeting. It is also a good idea to have a pie chart that shows how much you are going to spend each day, or how much you can save, and have fun teaching the concept of budgeting.
Talk about how difficult it is to use a limited amount of money in a month's living, how important it is to consume, but do not explain it in detail.
5. Credit and Debt
When we talk about credit and debt, let's briefly describe what decisions to make when making economic decisions, or why we should avoid situations where we owe debt.
One of the easiest ways to understand this subject is to borrow money with credit and then pay it back later. However, you must tell us about the value and results of your credit. It is good to make a story and to give an example of a situation related to a child.