While I’m not a “helicopter parent”, I believe that children should learn about money management as early as possible to get them started on the right foot as they go about managing their own money.
According to the Parenting & Money Study 2021 conducted by the Investor and Financial Education Council (IFEC), 81% of the interviewed parents would offer pocket money to their children to meet their actual needs (77%), and about half (53%) would do so to get their children into the habit of saving. Only 28% of the parents considered giving pocket money as an opportunity for children to learn about money management.
Money management is more than just talk only. Children need practical lessons with pocket money to learn how to spend wisely and to develop a sense of financial responsibility, discipline and good habits.
Parents may refer to these three tips to start the conversation on money management with their children.
1. Don't spend every penny
Teach your children to divide pocket money into three parts under the concept of “save”, “spend” and “share”. Make children aware of the fact that we all have a limited amount of money which will never be enough to fulfil all our wants. Besides refraining from making impulse purchases, parents can also guide children to distinguish between “needs” and “wants” and to check if they already have a similar item at home before purchasing any new items.
Teach your children the concept of “save before you spend”. By encouraging your children to plan and set saving goals, they can feel proud to use their own money to buy the items that they plan for!
More:
Activity sheet: Goal-setting guide
Activity sheet: Knowing the difference between needs and wants
Help children distinguish between “needs” and “wants” in 6 easy steps
2. Learn to set budgets and record expenses
Encourage your children to observe the fundamental rule: never spend more than what you have. Teach them to use a notebook or online tool to set a budget and keep track of expenses to see where the money has gone, and whether they are able to stick to the budget, or if there’s a need to adjust the budget. Encourage children to make a shopping list of what they intend to buy to avoid impulse purchases.
More:
Activity sheet: My shopping list
Activity sheet: Comparing special offers
3. Set rules beforehand
It is important to set some ground rules with children about how their pocket money may be spent. For example, they should spend within their means and face the consequences of overspending – such as not getting any extra money if they overspend. The best way for children to pick up good money habits is to make them responsible for their actions.
IFEC’s “Detective Chin Chin” money management online quiz
Take on the challenge from Detective Chin Chin, and let your children play this fun and interactive quiz game on money management!
The quizzes are designed for primary school children. For a better experience, please use a tablet or laptop. IOS mobile users are recommended to copy and paste the game link into your browser.
Quiz 1: Chin-tective Bootcamp
Quiz 2: Detective Chin Chin Money Management Adventures
