Kids are much smarter than you think, they get grasp of the world much faster than us. For this reason it is important to teach them the value of money at early as possible, let them understand the joy of earning, value of saving, and how credit works. Because if you don’t teach them how to manage money somebody else will, this might not be good for them. Here are some tips about how to teach your kids about smart money management.

No Allowance

Never give your children free money in form of allowance. Allowance never teaches the kids the concept of earning and the value of money. They think that it is free money that they get at the end of every week. Instead reward them little money when they complete any task. It will give them the concept of getting paid, and give them the joy of earning. It also makes kids disciplined and well behaved.

Transparent Piggy bank

Piggy bank is a good idea for kids. It is their first banking system where they understand the concept of saving. However normal piggy banks don’t give them visuals. For this reason it is better to choose a transparent piggy bank. You can choose clear jar for this. At the end of the month let them count they money they saved and let them understand the concept of saving.

Let Them Make a Purchase

After couple month of saving in the piggy bank, let them make a purchase with their savings. It will give them the concept of expenditure. It will give them the understanding of valuation of every product. They will learn what they can buy with their savings and what not. Let them make plan for next purchase and discuss with them how they are going to do that.  It will make them clever at the time of expenditure.

Teach Them about Credit

It is very important to teach kids the fundamentals of credit. Let them borrow small amount of money from you for their desired purchase, and at the end of the month collect the money from them as credit payment. It will help them to develop the concept about the credit system. A strong understanding of credit system is required to make smart financial decision in future.

Include them in your financial discussion

Almost every parent do this mistake, they treat their kids immature and exclude them from financial discussion. Don’t do that. Keep them nearby when you are discussing financial issues in house. Let them include in your conversation. Include them when planning your budget, paying bills, or planning major expenditures and vacations. It will fortify them with real financial world decision.

Nowadays Kids have access to more technology and more desirable items on internet. For this reason it is important to educate them about the money management system. If you could teach them the fundamentals of the money management system in the early age, it will be beneficial for him in the future.