It's a good idea for kids to earn and spend their own pocket money, learn to calculate values and buy a few treats or toys they like with their own money. But more importantly, teaching kids healthy spending and saving habits at an early age.
How do you teach your child the importance of saving money and spending wisely?
My kids are 8 and 4. We set up 4 little banking "buckets" for spend, save, give and invest. We talk with our kids about the importance of thinking of money in different ways. The "save" bucket gets deposited through the school banking savings account each week. When we get the statements I show my boys how to track their deposits and where they have received any bonus interest. They also take note if how the balance has increased.
The "give" bucket the kids use to either drop into charity collectors (the Guide Dogs collection points are a favourite) or to purchase canned goods or whatever may be needed for local charity drives.
The "invest" bucket has been slowly accumulating and my kids use this to invest into things that are going to make them more money. My oldest cannot wait to purchase his first parcel of shares once I told him that he could own a piece of one of the big companies he always sees advertised.
They get a small weekly allowance but also know that there are jobs around the house that they have to do because they are part of the family and are not linked to pay.
My sisters kids have to do a bit of work around the house for their pocket money, in addition to receiving money as presents on their birthday etc They both have money boxes, and they have been taught to keep track of their spending.
My son gets pocket money and he has to save up for any games that he wants to buy. This teaches him that he can't have everything as soon as he decides. During the holidays I allocate a $30 daily budget and whatever we don't spend at the end of the holidays, he gets to keep. This teaches him to be creative during school holidays, when it comes to fun and he doesn't demand take away food everywhere we go, as he knows that every treat we buy means less money for him at the end. He learns responsibility when it comes to money and I don't have to stress about seeing my credit card bill at the end of the holidays.
My 5 year old nephew has a small piggy bank. After few months of following everyone else dropping coins into the piggy bank, he has now developed a habit of dropping any coin he finds into the piggy bank. He will gleefully tell you that he is saving money to purchase his very own laptop.
My children's school encourages students to open bank accounts, and every week they can submit their savings of the week to be deposited into their accounts, which is taken care of by the PFA members. This encourages the young children to save money.
Each time we went out for shopping, my kids used to have a long list of "very important things to buy!" By giving them a fixed amount of money at the end of each month, they get to decide whether they want to spend them or save them for something they really want to have. Consequently, their shopping list has shortened and I also don't have to face any whining from their part! This also teaches them that they can't have everything that they want, whenever they want. At the end, they will also value the things that they buy.