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Its important to talk openly with children from an early age about money. By the age of 5 or 6 they are able to understand the concept of earning, saving and paying.
We should encourage children to undertake simple chores in exchange for pocket money. It doesn't have to be much. Children also need to learn about budgeting and saving and there is nothing wrong with teaching them the challenges of a low income. This can actually be a positive lesson for them for later in life.
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Here are some tips to present money management to children in a positive light:
Dont grumble about lack of money around them or show anger when they ask for something.
Turn it into a lesson. Discuss with them ways of obtaining things that they want. Talk to them about how you budget and save.
If you take them with you to the supermarket, talk about specials. Let them help you find the best value products. This keeps them occupied and is great for their math skills.
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Let them see you using cash as well as your ATM card or credit card.
Explain to them where the money comes from (that its not free money from a hole in the wall), how a bank works, etc.
Find out whether their school has a student banking facility and encourage them to use this. They can deposit very small amounts and do not incur fees.
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Let them see you depositing money in a savings account or dropping coins into a moneybox. Encourage them to do the same.
Some banks will issue ATM cards to children as young as 12 years of age with parental consent. Think carefully before doing this. Perhaps you could keep the card in a safe place and monitor its use.
Explain the concept of lay-by and involve them in the process.
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Provide them with an incentive to reach their goals. If, for example, your child wants a particular toy, cut out or draw a picture of the toy and stick it onto a glass jar. Explain that this is specifically to save for that toy. This establishes a visual connection to the goal. Each day or week you or your child deposits money in the jar and you keep a running total. (You may agree to match the savings dollar for dollar). Let your child take the jar to the shop to pay for the toy. This will serve to complete that visual connection.