It is important for children to get money lessons so that they grow up to become financially responsible and confident citizens. Read on to know what crucial lessons you as a parent can give.
Personal finance and money management cannot be taught in a day. It should be systematically and gradually introduced from childhood. You can help your kid understand the importance of money, and with time can tell them about how to manage it. This would not only help them in being confident about money dealings but will also keep them away from mistakes that their elders committed.
In this article, we discuss some crucial points which can help you in inculcating personal finance habits in your kids.
Let Your Kid Take Small Financial Decisions
You can’t expect the kids to take big financial decisions on their own unless they are comfortable to take small decisions for themselves. For example, when you go for a shopping, then give them the liberty to make a choice and decide what should they purchase and why. You can reward them if they manage to do shopping within a certain limit. It’ll help them to focus on value for money shopping rather than indulging in over-spending.
As the child grows year on year, involve them in possible financial decision making. It’ll make them financially responsible and confident.
Teach The Basics Of Banking
Banking can be the initial step to connect kids with personal finance. Most banks offer savings bank account facility for the children. By connecting with the bank, children will learn about keeping money in the Saving Bank Account, using a debit card and other bank related facilities.
Fix Monthly Allowance For Your Kid
You must fix certain monthly allowance for your child and keep a strict watch on the way they spend money. If they manage the allowance in a smart way, then do not hesitate to reward them by giving gifts or little more money. The monthly allowance helps the child to grow up with more monetary responsibility and brings in a sense of accountability.
Teach Importance Of Saving And Investments
When children ask for money to fulfil their demand for a toy or a book or any other thing, then the better way would be to ask them to save from their pocket money and afford it. This will give them a lesson on the importance of saving money. Similarly, teach them about investment and how it can help in growing money in the long term. You can help them in opening a Recurring Deposit account and share the joy of seeing their money grow.
Educate About Spending And Debt
Making a right spending decision is as important as saving the money. Teach your child how to spend money the right way. It is important that kids know about tracking their spending and cut unnecessary expenses. Help your child to learn about setting a goal for various spending matters and make a budget beforehand. This would also sensitise them about debt and how to manage it.
Unnecessary debt can put immense pressure on personal finance, therefore you must teach your children about when to raise and a avoid debt. It is also important that kids learn about timely debt repayment. You can teach this by occasionally borrowing money from them and repaying it with interest in a fixed timeline. Similarly, when a child demands something which they can’t get using the pocket money, then bring in the concept of lending. Teach them to manage it with their pocket money. It’ll help them to understand how borrowing and lending work in real life.
Although money lessons are important, try to make the learning lessons interesting. Maintain right balance and while giving money lessons, teach them also about values of family, relationship, and humanity
Note: The article mentions some ideas to teach children about personal finance. You can use your own method to make your child learn.