Giving children an allowance is a good opportunity for them to learn about proper money management. A study published in the Journal of Economic Psychology suggested that kids who received an allowance spent less and had better money management skills than those who did not. This shows that the best way to teach kids about finances is to give them an opportunity to handle their own.
And here’s a better idea: let your child earn their allowance. “Free money” may be unwise; we all need to work hard and work smart to earn money for ourselves. Giving our kids unlimited “free money” by just handing them cash whenever they ask for it, is not the right lesson to teach.
Filipino financial experts agree that giving kids an allowance by having them “work” for it is the better way. For example, many parents nowadays give their kids a weekly “sweldo” for completing tasks at home or helping in household chores.
As soon as your child starts “earning,” teach them how to properly budget their money: setting aside a portion of their savings and then spending on needs before wants. Nowadays, teaching kids the importance of saving has been made easier with bank accounts specially designed for them.
A savings account for kids is a great way to make them understand that their money will grow over time as long as they continue to make smart decisions and develop the habit of saving. This is also a great way for parents to show their kids how financial institutions protect their money, how their savings are adding up, and how much progress they are making towards their goals.
For this, you can try the BDO Junior Savers Account. It has an affordable initial deposit and a low maintaining balance.
It doesn’t just stop there. Parents can also help their kids grow their savings using a Junior Savers Plan. This allows you to add to your kids’ initial fund by scheduling regular deposits using your BDO Online Banking Account. Just set the amount and date of transfer and you can easily build their savings and teach them more money lessons.
With these lessons, your child will more easily learn and practice saving money—a life skill that will give him or her a future of financial freedom and security.
