Friday, 9 August 2013

Money smarts

Money smarts

One of the most important thins everyone needs to know is how to manage money: where it comes from, how to spend it wisely and how to save and invest it. This is being Money Smart. Many parents do not teach children money management skills. Schools do not include financial literacy skills in the curriculum. I feel that is never too early to educate children about money.

Being money smart is important because it determines whether future adults will manage their resources well or fall into debt. According to Neal Godfrey, chair of U.S. Based Children’s Financial Network: “In 2001, more than 120,000 young people under the age of 25 filed for bankruptcy. If children don’t learn solid money skills at home or at school, then they are on the path to a lifetime of financial instability.

I also had no idea that I had so many option for saving or investing. In my head, I always thought that insurance was for people who were about to die. I was perfectly healthy, why did I have to buy so many kinds of insurance? All the money talk made my head spin. I realized I had to learn this new language.

As a parent, I know that we often worry about securing our children’s future by trying to save money for them. However, more than money itself, we need to teach them and help them understand how to manage money and be money smart. It is life skill worth investing in.

A. Basic money skills
When should we start teaching children how to handle money? If they are old enough to ask you to buy them a toy, then they’re old enough to learn about financial concepts.
If you have never bothered to have the “money talk” with your teenager, don’t worry, it’s not too late!

            The best way to teach kids basic money skills is to make money a part of daily life. Involve them in the daily aspect of money.
            For young children, teach them to count money. Play games with them so that they will be able to identify different denominations. Practice trading equivalent values so that they understand money values. For example: show me different ways to make P20. they can give your four P5 coins, two P10 coins, etc. you can do pretend play shopping to practice paying and counting correct change for items.
            Older children, such as 12-15 year old, can be given bigger responsibilities. They can be asked to do grocery shopping or school supplies shopping on a budget. This will force them to estimate amounts and compare price to be able to buy all the required items, taking into consideration how much things cost. They should be encouraged to take responsibility for paying for their books or their meals in a restaurant. Basic money skills should enable kids to handle money properly, and they need lots of practice and accountability to get this right.
            In preparation for adulthood, older teens can be involved in managing household expenses. Show them monthly bills you have to pay. Kids are often unaware of how much electricity, water, cable and telephone services cost. Increasing awareness of this responsibility can even encourage them to help in cutting cost by simply unplugging, turning off lights and water and minimizing the use of the air conditioner.
            In line with our advocacy for the environment, we ran a school wide “Energy Pledge” campaign to ask children to reduce electric bills at home. They noted down their electric bill from month to month, with a personal goal to reduce it by simple conservation efforts.
            The families of our school children enjoyed doing this and I would like to encourage you to do your own “Energy Pledge” in your homes. Whatever money you save can be spent for family bonding activities such as watching a movie or eating out.

B. Opportunity to manage money
Financial “know – How” is one of the best gifts we can give our children.

Managing money involves understanding
5 money smart concept:

1.Financial responsibility: How can you spend money responsibility?
2.Fiscal responsibility: How do you keep track of your money?
3.Saving and investing: How do you grow your money?
4.Responsible Consumerism: How do you make smart choices when spending your money?
5.Credit and debt: How do you use credit properly?

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