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Money Matters for Kids

Money Matters for Kids

Issue 75 December 2010

In these financially difficult times every member of the family - young and old - needs to help out. Taimoor Mirza suggests how you can get your children involved.

 

Q)

“I want to get my children used to saving and managing their money. What would be your top tips to help them become financially savvy?”

A)

If you want to teach your children about the value of money, it’s generally a good idea to start when they are young. Even small children understand the basic concepts of what money essentially is and how it works (paying with money to buy goods). Getting a firm grasp on the fundamentals of personal finance is important as everyone uses money to get by in life.

 We all know kids are given knowledge throughout their educational years; they are taught maths, science history, etc but there is no class on money management. Therefore, the onus falls on the parents, and if they are not prudent and do not start teaching these fundamentals at an early stage, the kids will learn through painful trial and error. Parents only have to consider how much better off and stress free they would have been if someone had taken the time to explain to them the perils of unauthorised overdrafts, loans, how credit cards work, and the manner in which they should be used, as well as the advantages of saving accounts and how to utilise them most effiectively.

 One of the best ways to teach your child how to manage their money as well as to be financially savvy would be to set a good example, as kids do tend to pick up their traits and their good and bad habits from their parents. If you yourself spend more than you earn, then obviously your child will have little respect for financial management. However, if your kids go shopping with you and see you spend prudently and effectively, then they will learn to realise the importance of money management. At the same time, if you communicate with your children the importance of money, they should not overindulge. Teach them also the balance between ‘want’ and ‘need’, and try and explain this in jargon-free terms. In a materialistic society, it is difficult for kids to comprehend why they cannot always have something they want or rather, why you won’t get it for them. Teach them why and show them individuals who are less well off. If your child is used to getting whatever they want whenever they want, they will easily fall prey to excessive consumerism.

 There are also other ways you can help teach your kids, which can vary according to your own life and parenting style. If you, for example, currently give your children pocket money and have always given them pocket money, then implement a programmer which connects work with that pocket money.

 Another useful thing could be to open up an Islamic savings account for them, or if they want to keep money at home provide them with an attractive ‘savings pot’. This gives them the freedom and the independence to manage their own money as well as learn for themselves.

 In the end, it comes down to how active you are in teaching your children. If you want them to have good manners, you will ensure they learn them. The same principle should be applied when it comes to making them more financially aware.

 

For more of our finance articles, click here




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Comments

1 Comment

1

aztec

24 Mar 11, 15:05

Really good advice on money management for kids,
especially regarding the pocket money. We've just
launched http://pocketpound.com/ along the same
lines.

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