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Children and money

Modern children learn about money role in life very early. They see their parents paying money in the store and buying something for them. They hear people talking about money at home, on TV, or on the street. They early realize that money allows get what you want and they start striving for independent use of money. We will tell in this article how to teach a child to use money rationally.
Children and money

It is believed that one should start learning how to handle money from the age of four. Only at first glance, these topics are far from child’s interests. The child usually gets involved in the economic aspect of family life very quickly.

Children usually have their own piggy bank or pocket money from the age of seven. They wait for a holiday in order to receive a precious envelope from their aunt or grandmother. At this point it is important to explain where these funds come from and that money needs to be spent wisely.

From the age of ten, you can play Monopoly with your child. The game has changed significantly over time, but the essence remains the same. It is perfectly clear what the budget is based on, the difference between salary and income and what the costs are. Most importantly, it allows convey the idea that there is no need to spend the entire amount at once, because something may not go according to plan, there is a high risk of sudden spending.

In teenage years children already have their own bank cards, and at the age of 17 - a personal financial plan and first income. Communication is important at all these stages. Adults have to explain their children that savings can be made different ways, and there are many financial instruments to achieve this goal. However, this point must be understood by themselves first.

How much pocket money to give

This is determined by your real family opportunities and common sense. And you don't have to feel bad if you can't give your son or daughter the same amount their classmates get from their parents.   

It may also be that you are not on a tight budget. How to determine the maximum limit of child allowance? Common sense helps again. It is not at all necessary that the amount of your child’s pocket money should grow in proportion to the increase in your family budget.

The experts seem to agree on one point. Pocket money should be given regularly: those who are younger should be given once a week; older – once a month.

Do you need control?

Strict cost control of children's pocket money will not allow teaching them to make balanced decisions. It is very important to negotiate with the child and explain which purchase would be more useful, psychologists say. “Of course, it must be said that there should be a golden mean everywhere. To constantly control all the child’s expenses or vice versa, give money at any request and not discuss spending in any way, are two extremes that should be avoided,” says psychologist Dilyara Abulkhairova.

The expert notes that strict control does not allow one to learn, sometimes through mistakes, make balanced decisions, and take responsibility for their actions. And when the child grows up, he will expect that someone else manages his finances. “When the child makes his first personal expenses, it will be necessary to discuss these purchases with him, tell him which purchase can be more useful for him and explain that he can make more expensive purchases if he learns to save up the pocket money. A fairly simple and comprehensible scheme will contribute to development, independence and reasonableness, but one should not expect the result to come instantly,” the interlocutor emphasized.


American psychologist Allan Fromm believes that “the art of using money reflects our ability to control our desires,” and this art should be learned in childhood. You can start teaching your child to carefully and rationally manage money as soon as they begin to show interest in this side of life. Pocket money, piggy banks, introducing your child to everyday purchases and, of course, a parental example are the main ways to teach your child to save and thrift.

According to experts, it is impossible to teach a child to save money by spending it on trifles. Financial culture of the younger generation depends on the older ones. Is it worth creating a small capital for children? 

“Ideally, the child’s capital should be formed from their very birth. In this case, due to the long term, it will be possible to save amounts that are not so tangible for the wallet. The main thing is to do it regularly. Let's recall the Soviet past, when immediately after the baby’s birth, a bank book was opened in his name, which was replenished from each salary. We live in a different time now, but the idea itself is worthy of note,” believes financial analyst Ruslan Sundetov.

The classic savings tool is a bank deposit. The banking sector, however, constantly undergoes reforms and changes, and not everyone can monitor the situation every day. Therefore, endowment life insurance is an alternative to classic deposits. Insurance is the main difference between such products. If insured event occurs, the insurance company will pay out or continue to make contributions for the client, and the child is guaranteed to receive capital by the scheduled date. Besides, endowment life insurance has tax and legal preferences.

“Our child can be a beneficiary of any of our savings or investment products. You receive guaranteed savings in foreign currency or in tenge by a certain date, and there is round-the-clock insurance coverage in all parts of the world for the entire period of the deposit. And do not forget about legal privileges: policies are not declared and are not subject to confiscation. Long-term savings are an excellent protection against financial fluctuations and unforeseen situations,” says Aida Kamyssova, the Board Chairman of LIC Nomad Life.

Insurance products are suitable for both conservative clients (who want to have savings with a guaranteed rate, an alternative to bank deposits), and for those who are willing to take risks by investing money through an insurance company in the stock market, investment insurance.

“Many people in their attempt to teach their child to be prudent, give them money in an envelope. However, children can be given a small bank deposit or life insurance policy. Firstly, money in a financial institution always works and brings return to the owners, on the other hand, such savings protect children and adults from impulsive spending. US grandparents, by the way, often buy savings or investment policies for their grandchildren,” says the Nomad Life executive.

Whatever form of savings you choose for your child, remember that it is crucial to move forward, constantly improve, and the 1st of September can be a good date to start teaching financial literacy and financial discipline not only for the younger, but also for the older generation.

Photos are from open sources.


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