Money must be handled with care. Young children are keen observers, fast learners and perceptive beings. Which is why money lessons taught at a young age can help your kids wisen up early and have a greater handle on their financial future.
Everyday activities like grocery shopping or visiting the neighbourhood mall provide you opportunities to impart financial wisdom to your kids. As a responsible parent, it’s one of your duties to slowly help your children understand the value of money. This Children’s Day, let’s look at some ways to help you share your money management skills with your kids.
How Money Is Earned
Besides the few who are born with a silver spoon or inherit wealth, all others have to work hard to earn money. It may take your children a while to grasp this, given that their needs and wants are being managed by you. In the era of digital banking, online shopping, 24×7 entertainment, and instant gratification, your child may be tempted to believe that the going’s real easy. And so we must keep politely reminding our children that their parents have to work very hard, which is the only way we can have money in the bank. You can help them understand this better by rewarding them for tasks like tending to your home garden or keeping your home tidy.
The Importance Of Budget
Budgeting is an important concept for everyone to learn. It is simply about the income you earn and its allocation towards various important expenses. Being able to budget well helps you practice goal-oriented thinking, self-control, and patience. So, involve your children in discussions about your monthly home budget while sensitising them about financial priorities – or what your needs and wants are. For instance, you can take them for grocery shopping trips and challenge them to make purchases within a budget. As a parent, you need to lead by example and be the shining light of financial prudence. You can do this by enforcing your budget plans thoroughly and keeping bad habits such as impulsive spending under check. As a parent, you must surely fulfil your children’s needs but be careful not to rush to fulfil all their desires, as this would make it harder for them to understand the value of the money spent.
Tell Them How Saving And Investing Helps Money Grow
An emergency is an emergency and be it an adult or child, everyone needs to be mindful of this fact. You should share with your children your experiences about how your savings helped you tide over an emergency. You can also ask them to manage their cycle repair expenses from their piggy bank or manage their next toy purchase from it as a way to realise the worth of patience in money matters. This would give them an invaluable lesson about saving. If your child is grown up enough to understand the concept of compounding, sensitise them about various investment options to create wealth.
How Credit Works
The convenience of using a credit card for your purchases is great. However, one needs to exercise restraint while using them to avoid overspending. You also need to repay the credit amount before the due date to avoid falling into a debt trap. Teach your kids about the concept of debt and how it needs to be repaid within a deadline. To make them understand better, you can borrow some money from their piggy bank and return it along with some extra money. You can tell them that the extra money given to them is the interest they earned on the lent money.
Don’t Spend Beyond Your Means
As parents, it is your job to draw a line whenever you think the children are being pushy with their demands or feeling the pressure to keep up with their peers. Soft counselling from an early stage about how we can only spend as much as we earn will surely instil in your kids the worth of money. Beyond what they provide your children, you can permit them to earn their own income in order to fulfil some of their aspirations.
By imparting these crucial money lessons, you can help your child become a financially independent individual.
The writer is CEO, BankBazaar.com, India’s leading online marketplace for loans and credit cards.