Encourage children to keep tracking of income and expenses
Spending pocket money is the first step of a child’s financial education journey, but many parents think their children are not using their money wisely. In fact, they may encourage the little ones to keep track of their income and expenses, and gradually acquire the concept of financial balance. As they identify the causes of expenses, children will develop a good spending habit. When teaching children to keep accounts, parents should pay attention to the following points:
1. When to start
Young children may have difficulty in writing or calculating, so parents can help them to record their daily expenditure and let them watch and learn. Children around 8 years old should be able to record expenses by themselves.
2. Items to be included
The recorded items should include gross income, total expenditure, savings, spending, donation and balance. Parents can update the record with their children daily and list out all income and spending items to see if they can maintain a balanced budget. If the children are overspending, they should find out the root cause, and avoid unnecessary expenses by identifying what they “need” and “want”.
3. The right concept of savings
Many people have a wrong concept of savings - savings are the amount left after deducting all expenses. Parents should teach their children to set aside part of their pocket money as savings first, and record the item on the balance sheet.
4. Review and improve together
It's important for parents to let children make their own decisions. They may review with the children and offer guidance. However, instead of correcting them immediately whenever the children make a mistake, parents should allow them to learn from mistakes. When children save regularly, parents can reward them with their favourite activities or food.
9 February 2018