Here are 12 personal finance tips that will help your college-going child manage his or her money better.
Teaching your child about the basics of personal finance can go a long way towards helping them manage their finances in future. Money management can be a bit tricky, especially for children who have little knowledge about things like budgets, savings etc.
This is why it is important to impart such knowledge to your young ones at an early age. After all, you certainly wouldn’t want to see your children struggling with debt as they grow older.
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To help you on your way, we’ve put together 12 basic finance lessons that you need to teach your college-going child. These tips should help them develop into financially independent and responsible individuals. Here’s all you need to teach them about personal finance:
Money doesn’t grow on trees
Although most of us think that currency notes are made out of paper pulp, that’s not true! They’re mostly made out of cotton and cotton rag. Fascinating, right? Well, that’s just a quick fun fact. The real money lesson that you need to teach your child is the fact that money doesn’t come easy. Although spending money is a piece of cake, earning it isn’t as easy.
Saving is a good habit
Among all the other good habits that you need to inculcate in your child, saving right is one of the most crucial ones. Even we as grown-ups seem to face a lot of trouble when it comes to saving, don’t we?
To ensure your children don’t face the same issues, you need to train them right! We’re sure that you want them to grow into financially independent individuals instead of becoming spendthrifts who call you at the end of every month asking for money.
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Budgeting is important
Making a monthly budget and following it meticulously should be an indispensable part of their routine. They might dread it in the beginning but we all know how helpful budgeting is. Classifying necessary and unnecessary expenses at the beginning of every month is the key to a great budget.
Monthly allowances are limited
As a college-going kid, monthly pocket money is limited (in case it isn’t, it should be!) and as your kids grow up, they’ll get a limited allowance per month called salary. Instead of telling them that they can spend left, right and centre once they start earning, it’s better to give them a realistic view of things.
Priorities need to be handled on priority
They need to differentiate between what’s on priority and what’s not. If there’s a rent payment due, it’s better to save up for that instead of buying the latest PlayStation. Once they know how to prioritise well, half your work is done.
Shop when you need, not when you want
One of the most important lessons they need to learn is how to differentiate between needs and wants. If your shoes are torn and you have to buy new ones, that’s need. But if you want to buy a pair of shoes just to compete with your friend who got them recently, that’s want. Most of our meaningless shopping is a result of not being able to understand the difference between need and want.
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Emergency funds can be your saviour
Keeping some funds aside for emergencies is quite necessary. You need to make them understand that Credit Cards are neither meant for impulsive purchases nor to act as your emergency saviour. Not being able to save well for emergencies can often lead to a lot of debt piling up and nobody likes that.
Setting certain financial goals help
Like everywhere else, setting goals for your finances also helps. They need to understand the value of money and the best way to do that is by teaching them how to save. If they want something badly, teach them to save for it. The joy you receive after buying something you saved for is certainly one of the best feelings in the world. Help your child experience it.
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Monitoring your money is a good idea
Keeping an eye on your finances is always a good idea and giving some early lessons to your kids about it is an even better idea. Making a monthly budget keeping various priorities in mind isn’t enough. You need to follow up and keep a close watch on your spending habits to ensure that you’re actually sticking to the budget. A great way of doing that is making a note of all your daily expenses. It’ll help you track your money better.
Poor choices can make you regret later
This applies to almost everything. If you don’t choose wisely, you’re likely to repent later. When it comes to finances, you need to take your time and think wisely before making an investment or buying something big. Make your child understand the repercussions of making a wrong choice. This advice will help them with all other things in life and they will surely thank you one day.
There’s an app for money management
Everyone likes using apps for various things as they simplify our life in many ways. Whether it’s grocery shopping, finding a house or looking for the best offers on your favourite brands; all you need to do is pick up your phone and download the app. Since the ‘app-culture’ happens to be more popular with youngsters these days, your child might actually listen to you and use it. That might also mean buying them a good smartphone (just a heads up)!
Being responsible can make a huge difference
Whether it’s finances or anything else, you need to make them understand the importance of taking up responsibilities. Soon, they’ll have to deal alone with the world and if they continue to be too dependent on you for making decisions and for money, it’s bound to get frustrating for you and them both.
So, better do something about it when you actually have the time. Start small. Give them a target and ask them to save up for it. Or make them keep an account of monthly grocery bills. This way, they’ll learn the importance of being a responsible grown-up, which is a great lesson!
Additional Reading: How To Be A Responsible Credit Card User
We hope that these pointers help you turn your ‘not-so-responsible’ college goer into a fully responsible, mature adult. If you think we missed a point or two, please comment below and let us know!