Finance Homework – Give Your Child Pocket Money

11 Jun Finance Homework – Give Your Child Pocket Money

Do you know that children tend to be more successful when Parents take an active interest in their learning? Being a part of your child’s education can help them evolve faster. Getting involved with their homework will actually give them that much needed edge above their peers.

However, this does not mean that you sit and do their homework for them. It also does not mean that you pay them for doing their homework as an incentive.  As a Parent you must focus on making learning fun for the youngster. Teachers at school are good at imparting education, but as a Parent you can help your child apply it in daily life.

One of the best subjects where you can contribute is Finance. What better way to teach your child about money management, than by actually giving him or her hard cold cash. Various studies show that students, who received pocket money, were better at their finance homework than their peers. They learnt more about saving, investing, debt, credit and financial responsibility.

Motivate

Finance can be a difficult to grasp subject. But you can turn it into an entertaining and pleasurable exercise. Relate the concepts with the day to day happenings. You could go to a store, where you could ask your child to find the most profitable chips packet. He should base his decision by analyzing the various offerings on their price, weight and quality.

Another way to help with finance homework is to give that extra motivation in the form of money. Let your child discover the joy of correct money management and the problems when not handled wisely.

How much to give?

As a Parent you must be confused as to the monetary needs of your ward. Being adults we overlook the joys of childhood. While fixing on a reasonable amount, it is necessary for you to think about some very basic questions.

  • What do you expect your child to spend the money on?
  • Will you still be covering transport and lunches?
  • What is your budget?

If you really want your child to understand his finances as a student, then while setting up pocket money you need to cut back on few areas where you usually spend. It would be a good learning exercise for your child to manage transport and lunch cost himself.

Purview of Pocket Money

The basic concept of any finance education is allocating costs and striving to make profits with the provided resources. Allow your child to make his own decisions in spending the money which you give him. Let him decide whether he wants a conservative approach where he saves for that special toy, or be liberal where he takes risks. In both scenarios you would be teaching him about some exceptional life problems.

Chores are good

Another practical way of teaching is when you put your child on an allowance. You let him work his way to that toy rather than saving. It would be a good idea to bring in this technique when your child has already proved to be a risk taker and blown all his money off. This would teach him that though risks are good, they should have an equivalent payoff.

In the meanwhile, he would learn the importance of hard work and will manage his finances in a better way next time. Allowing your child to earn his own money will also inculcate its importance. Every thing that comes easy is always taken for granted. Giving your child money for doing chores around the house will help him develop into a morally correct person.

Limitations

Money is one of the most important resources. Your child needs to understand that misuse of a resource will always lead to consequences. Never think twice in coming down hard if you feel your child is crossing the borders. If you think that his spending all the cash on candies affects his dinner time appetite, then it is time to make some rules.

You can begin with an understanding. In a firm, the money is of shareholders. Even though the managers are allowed to play with it, they are not allowed to spend it on anything and everything. Following the same principle, you must help your child understand that even though he has money in his pockets, it comes with certain limitations.

Get Amazed

Use this time to teach the importance of prudence. Money spent on a good cause is money spent wisely. In today’s world cash is a double edged sword.  Don’t just teach a child to save. Teach him to invest.

Your child will not cease to amaze you when you start with this practice. However, a word of warning, once you get your child hooked on getting pocket money or earning it, there is no going back. As a Parent you will constantly have to monitor his spending activities.



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