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Money makes the world go around, or at least that is what everyone says. What exactly is ‘Money’? If you go down to basics, it is after all a piece of paper that has a nominated value. Well it is a currency or mode of payment that is recognised across the board. But is that really all it is?

What you can’t deny is that money management goes a long way and a recent study from North Carolina State University and the University of Texas finds that children do pay close attention to money-related issues and that even children at a young age has a concept of finances and the importance of money management. Some of the most common topics discussed among families are mainly spending and savings.

While age can affect comprehension, Shin (2013) mentioned that even young children aged three understood the concept of saving and spending.


Emphasis on Money Management?

Effectively, teaching about money management is not just about finance management for the future. Richard highlights that money gives individuals decision making opportunities. By empowering and educating children, you are essentially preparing them for their future.

Children learn from those around them. You’ve probably heard this a million times. Well it is true, peer influence is great and parents are number one on a child’s list. Shin (2013) has placed a great portion on financial awareness and behaviour on parents, so as “to raise a generation of mindful consumers, investors, savers and givers.”

So, how do we start?

The basics are to educate children on savings and spending (wisely). As our children grow, they will be able to distinguish better between needs, wants and wishes.

Once children grasp the concept of savings and spending, the next hurdle would be the concept of waiting. Saving takes time, and parents should assist in their child in planning a viable saving plan. Goal setting comes into play when a saving plan is set into motion, and this is beneficial to the child as they learn to take responsibility for themselves. Goals should be realistic, and does not span into long extended period as children may lose the motivation along the way. What we want, is that ‘Savings’ be of happy returns in the long run.


One concept recommended by Shin (2013) is the Three Jars Practice.

Basically, it is to introduce three jars labelled “Savings”, “Spending” and “Sharing” namely. The spending jar can be used for small purchases such as candy while the savings jar is for much bigger purchases. As for the sharing jar, it can used to teach the child the joy of giving. It can be a gift, a donation, or an amount set aside for others’ needs. Children will learn of how to divide their money between these three jars. Parents will also need to offer guidance and explain of how this system works.

Here’s an example from http://www.threelittlemonkeysstudio.com/:

Encourage children to keep records of money saved and spend. One way is to keep a money booklet. Plus point (It helps you kids count and practice maths) For older children, they will be exposed to external media and it will be a good time to educate them on the concept of borrowing and interest calculation. With cashless payment, such as the credit card or internet transactions, it is recommended that parents explain about how these systems works. It is easy to wind up spending unwisely with access to a credit card, so parents must keep a keen eye on how their child uses it, if the child is given one.

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Laura Shin. (2013). The 5 Most Important Money Lessons To Teach Your Kids. http://www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/


Paul Richard. 15 Ways to Teach Kids About Money. Retrieved from: http://life.familyeducation.com/money-and-kids/parenting/36332.html?detoured=1


Matt Shipman. 2014. Study highlights importance of parents talking to kids about money. Retrieved from: http://phys.org/news/2014-04-highlights-importance-parents-kids-money.html