Parents always do their best for their children and try to teach all the wisdom accumulated in their lives, which means that credits and their use as knowledge is a very important subject that should be discussed with their children. And, after making such a conversation, you will most likely come to a situation where you will have to choose your child to authorize the status of your credit card or simply send money to a bank debit account so that the young person takes care of their finances.
The easiest way, of course, is to spend your daily spending money, or at the beginning of the month to give your account a monthly amount of money, and let yourself choose how to spend it. All these situations are, of course, instructive and in all situations the child is placed in a situation where he needs to take care of his money and try to spend it as wisely as possible. And yet the issue of daily money is not comparable to the issue of monthly budget money, because daily money is like a constant cash flow that is spent on the same day, but the money given to a child at the beginning of the month has to be stored and endeavored to make its own monthly budget with planned spending and opportunities money for bigger purchases. If your child is responsible, you can start immediately with a weekly or monthly budget, but if a child often loses home keys, purses or other personal belongings, then it is likely to start with a daily allowance and then try to move on to another cash-out cycle.
If you have decided to let your dads start learning money and financial education from a new age, or you just can’t trust them at the start, then I would recommend that you make the following money schedule:
- To spend the first month pocket money every day asking about where yesterday’s money was spent and where the money will be spent today.
- Next month to spend money every other day and just try to find out where the money was spent and where to spend.
- This should continue until the money can only be issued once a week, and if everything goes according to plan, you should slowly try not to ask where the money was spent or where to spend, but try to encourage the children to create their own budget plan, before spending money. last week’s review so he can understand where the money goes and how to use it better.
- If you are successful for the previous stage, then you are likely to immediately try to give the pocket money to the young person only once a month, but for the first few months try to keep up with the child’s expenses, because a child with such a large amount of money may not be able to handle it and spend it on various useless things.
If you succeed in getting through all these stages of development, it means that you have taught your children to deal with money in the average Latvian who gets paid for their work each month, and the next step is to teach the child about the loan and its applications.
Credit is of course a serious thing, and at first you can give your child more money by giving money, saying that this is a contingency money and will spend a little less on your monthly fee that will cause your offspring to understand how interest payments are made next month. , and why borrowing is usually an expensive pleasure. If here, too, your child is showing initiative and coping with his budget then you can go to the extreme before you run your own financial planning.
This last step – you can attract a child as an authorized user to your credit card, seeing all the child’s spending will be able to keep track of them and manually set credit limits and available funds. In this way, you will teach your child a real bank credit policy, how they work, and how such loans should be handled properly so that their interest payments do not increase or not at all. Basically, you can set a limit for your child for a certain amount and let him / her draw up and manage his / her budget, but the best thing is that you will be able to keep track of his expenses by looking at the bank account statement! In this way, your child will certainly have a great sense of responsibility that you entrust him with the use of your personal account and credit line, but it is imperative to look at his response so as not to entrust the young person with too much responsibility at an early age. Such a turn in the life of a young person can be a big turning point, because suddenly he has more money available, but the use of it will have to pay interest to the bank, but if necessary, this money will be available and it will make you feel safer, because different situations happen and life is happening. if your child is left without money it is not at all good.
Experiment to Teach a Child about Investments:
On the same topic, I can advise you to create a variety of experiments where you can set a budget that each euro a child will put in a deposit (savings bank) every month will grow by 10% or 20% , which will allow your child to see the investment potential. and it is these big interest payments who are interested in him. Of course, it is difficult to achieve such interest in real investment, but by teaching your young people about deposit and investment principles from a young age, you will definitely help him to make better and more intelligent financial decisions in the future.
Experiment to Teach a Child a Work Value:
Other experiments that you can let your kids do are different home tasks, where you can pay them money for performing different jobs in addition to the monthly fee. In this way, you can also teach the value of work and money, and if a child wants to buy a bigger toy or other item, he will have to work harder to earn it, or he will have to borrow money from the monthly budget.