It is very important to inculcate good financial habits in our children. As parents, it is also important to teach children about the judicious use of money.
Here are four basic financial rules that your children must know about.
Teach your children to make a choice between what is right and what is easy. Advise them to choose the right way to earn money, rather than the easy way. Teach them to be honest and responsible with money from an early age.
How To Save Money 101. This is probably the most important money lesson you will need to teach your children. It is said that children learn by example. Follow a strict savings plan yourself and choose to teach your younger ones the value of money. Piggy banks come in handy!
If you’ve ever taken a child into a toy store and had him/her run helter-skelter, unable to choose what to buy, we’ve all been there too. Make it a point to teach your children the difference between want and need. Do they really need so much candy or 20 packets of the latest Cricket Attax trading cards?
Additional Reading: All You Need To Know About Minor Savings Accounts
Another life lesson that is of great value to your children is that earning money for themselves is not the most important achievement in life. Teach them to be charitable too and aware about those less fortunate than them.
When should you begin money lessons with children?
- Ages 4-8
Most children in the age group of 4 years to 8 years grasp the idea of money very quickly. Many will even know how a Credit Card or ATM card works. It is a good idea to take children to a supermarket to show them how monetary transactions take place.
- Ages 9-10
From the age of 9 through 15, you may want to think about giving your children pocket money. This will be a good learning experience for them because they will be able to use the money responsibly. Allow them to make decisions about how they want to use their pocket money.
Pocket money will also allow children to start saving money and managing their allowance. Maybe you could open a savings account in their name. (But keep the Debit Card with you).
- Ages 16 & up
By this time, children are able to understand how Debit Cards, Credit Cards and ATMs work. You could begin to teach them about the responsible usage of a Credit Card. Don’t give them a Credit Card until you think they are responsible enough. And you cannot get a Credit Card in their name anyway until they are 18.
It will be very useful for your child’s overall development if they were taught to use money responsibly and save wisely. They will learn to value money and become careful spenders.
Additional Reading: 6 Golden Goals To Get Started With Your Financial Planning