There’s no question that a lot of what children learn, they do from their parents. Sometimes, embarrassingly, it’s the bad stuff – like that one time you used a cuss word when you thought no one was around. But, fortunately, they pick up the good stuff too. This is what stays with them for the rest of their lives. So, as a mother, it’s important to teach your kids values that will help them navigate this often complicated world. This is especially important when it comes to managing money. Here are some simple lessons you can start with.
Finance isn’t frightening; it can be as easy as A, B, C
The idea of financial planning can be putting off for many people. You think of finance, and you think – complicated terms, calculations, and what not. But the truth is that these are things that can be simplified and learned just like anything else. Teach your children that managing money is not something they need to be afraid of. Get your kids involved when you make your weekly budget or are making your calculations to fund a large expense. Leading by example is the way to do it. And these days, given how tech-savvy children are and the number of financial apps available, it’s even easier. Children love to learn new things. Make it fun for them and it’ll be smooth sailing all the way.
Additional Reading: How To Teach Healthy Financial Habits To Your Kids
Teach them about saving
Our own parents never lost an opportunity to lecture us about the “value of money”. Perhaps we can do things a little differently with our kids. Instead of telling them about the value of money, introduce young children to the concept of saving. If there’s something that a little child wants you to buy for them, show them that putting aside a little money every month can help them get it on their own. Pretty soon, they’ll be able to manage their pocket money and will learn how to strike a balance between spending sensibly and saving. You will be sowing the seed for them to manage their monthly budgets when they’re adults.
Moreover, teaching your children the difference between wants and needs is just as important as teaching them how to save. And rather than instantly getting children everything they ask for, teach them how to plan smartly and save up for big purchases. They will learn the value of tactical planning and that it’s simpler to reach a major goal by breaking it down into smaller goals that are easier to achieve. My husband Arjun is a great role model, showing our kids how to save for later or bigger purchases.
Work hard, reap the rewards
With my kids, I make it a point to show them that working hard is rewarding. Whenever I can, I throw a challenge at them and make them work for it. If the challenge is met, I reward them. The idea is to teach them that money and gratification can come only with hard work.
Additional Reading: 10 Tips To Help Your Kids Become Moneywise
Be independent; don’t take your parents (and their bank accounts) for granted
All of us parents love to indulge and pamper our kids. We only want to give them the best. Nevertheless, teaching them the importance of being independent and standing on their own feet at all times is paramount. Children should learn that though parents are always around to support them, dipping into their parents’ pockets shouldn’t be an option and it isn’t something they should take for granted. This applies to a future partner too. As a parent, equipping your children with sound financial fundamentals will hold them in good stead in the future and make them self-reliant.
Be prepared for rainy days
No one really likes the idea of talking to children about the possibility of something negative happening. Why put a damper on the natural optimism that goes with being a child, right? But it’s better for children to be prepared for the realities of life than not. It’s why we should teach them about the importance of building an emergency fund and how to go about creating one. Should your child go through a rough patch, knowing that they have something to fall back on will be a source of comfort to them and help them through it. Arjun is a great example of adeptly saving for emergencies and being well prepared.
Additional Reading: How To Build An Emergency Fund
Discipline is important in any walk of life and no less when it comes to finances. My grandmother taught me by example that one should always be disciplined in monetary matters. That is to say, never owe anyone anything, always pay your taxes on time, and ensure your financial books are clean. Helping your children develop the ability to be disciplined now will help them accomplish their financial goals when they turn into adults.
The art of budgeting
How do you introduce your children to budgeting? Teach them by example, of course. Show them your own monthly budget and point out what you have prioritised and let them know why. When I lived abroad for the first time on my stipend salary, I learned to start keeping track of my expenses and logging them on a daily basis. It helped me have a clear view of my books and alleviated the possibility of month-end shockers! Drawing on this experience, I feel that with the realisation that there is a limited inflow of money within which they must accommodate all their needs, children soon figure out when to save and when to splurge. The added bonus is sharpened math skills!
Additional Reading: The Dos And Don’ts Of Budgeting
Moving on from savings to investments
It’s not uncommon for Indian kids to get cash gifts from parents or relatives on their birthdays and festivals. Your children could either splurge the money or you could teach them about the wisdom of investing. Opening a Fixed Deposit for your child is a good way to start. But don’t forget to explain to them how depositing money for a certain time period in a bank or financial institution will earn them a little extra. Once your children are older, you could even try to explain to them how Mutual Funds work, although this might be a little bit trickier.
Additional Reading: Don’t Just Save, Invest
Give and you shall receive
When we give, we give it out of the goodness of our hearts. The joy we get out of giving is something we want our children to experience. A good way for them to experience this is to ask them to identify causes or issues they care about and donate regularly towards them. Encouraging them to donate to charity on special occasions like birthdays or anniversaries will help them evolve into altruistic young people. Later on, they will even get tax breaks under Section 80G of the Income Tax Act. But that’s just bonus. The lesson of saving and the joy of giving are much bigger gifts you can give your child.
Teach them about a Credit Score and Credit/Debit Card usage
Debt, when used carefully, can be rewarding. The key word here is ‘carefully’ and this is something that college-going children should be made aware of. Teach them about the importance of building a good Credit Score and how it will help them later on. Help them understand that unpaid debt could affect their future financial health. If you teach your children to manage their money well, they will, without a doubt, turn into financially responsible young adults!
Additional Reading: What Your College-Going Kid Should Know About Personal Finance
Children pick up most of their habits, including financial habits, from their parents. Leading by example is an excellent way to help them inculcate good ones. So, practice what you preach when it comes to money and your children will be as good as gold when it comes to their own finances!
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