My eldest son, Tim was four years old at the time when salaries  were started to be debited to bank accounts where all you have to do is go to the bank and withdraw.  He used to tag along when I withdraw from salary.  When he asks something and tell him we have no money for that,  his usual  response was  we will just go to the bank to get money.  I discovered  that he thought there is an endless supply of money.  That’s when I realized that his money lessons should already begin.

Do your kids understand basic money management terms such as budgeting, saving, and borrowing? How well your kids understand and manage money is a basic foundation in their adult financial life. Children should be taught basic money management skills early on. You can use everyday opportunities to teach them. Below are some strategies I have tried applying  to my kids when they were old enough to understand money:

  1. Explain how Automatic Teller Machines (ATM) work; that money in the ATM is earned money. If you do not work for it, then you have no money to withdraw; nothing will come out from the machine.  
  2. When shopping for groceries and other basic items with the kids, pay only in cash. This will help them associate purchases with cash. No cash, no goods.
  3. When they start school, provide an allowance which they can practice budgeting. I used to give my kids their weekly allowance with few extras just in case they wish to buy some inexpensive items.  This is an opportune time to teach them about budgeting or a spending plan.
  4. When they ask for big ticket whims,  motivate and teach them how to save to be able to acquire the item. Help them how to figure out how long they have to wait , based on the regular savings plan they put up.
  5. When they plead for something which they have seen on TV advertisements or from classmates, start telling them that when you want to acquire something, it should be based on your need for it, not the suggestions of others.  This is a nice way of saying no to a child’s wants.  This teaches them the value of saving up for thing they want which is not in your budget
  6. Set examples. Children learn about money by just observing their parents. Unconsciously, they get money ideas with what you do in the supermarket, mall, banks, including debtors. Hiding from your debtors is not left unnoticed by kids.
  7. Engage kids in planning  for major decisions requiring money as this will affect them. For instance, getting a house loan has implications on belt  tightening and giving up of small pleasures.

There are no hard and fast rules. You won’t be  successful in implementing money discipline most of the time. It takes patience and discipline. But it pays to get started while they are young. It might be too late.