Here are eight absolutely essential things your child needs to know about money.
Being a parent is probably one of the most exhausting tasks in the world. Not only do you do your best to ensure your child gets the best of everything, you’re also the one responsible to teach them the basics of life. One of the most important necessities of life is money and therefore it automatically becomes your job to teach them about financial management.
Additional Reading: Personal Finance: Lessons For Young Adults
It might seem like a difficult task to explain to them everything about money, but it’s actually easy. All you need to do is take a humongous looking complicated financial concept and simplify it as much as you can. Even teaching them about Mutual Funds and Credit Cards can be broken down and simplified. Don’t worry! We’ll tell you exactly how to make finance easy for your kids.
Learning is a continuous process, but to make teaching easier for you, here are some awesome lessons for you to begin with.
It Doesn’t Grow On Trees
This is probably what our parents have been teaching us since we were young. You need to impart the same knowledge to your kids. Make them understand the importance of money and how a meagre amount can help them get something important done. Even something as small as a 10 rupee note can get at least a couple of pencils.
Why is this important? Unless they know the importance of money and how difficult it is to earn it, they are never going to be careful about spending it. You don’t want them to become spendthrifts later, right? Better start early with this crucial lesson.
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It Needs To Be Managed Well
Money management is something even we as adults suffer with. To ensure your children become pros at it, you need to introduce them early to the art of managing money. How can you do that? We know teaching this can be a little tricky, but there’s a simpler way out. All you need to do is take them along for those grocery shopping visits. Let them understand why you choose a certain brand over the others and why you buy the main groceries in bulk.
Small (but significant) things like these can change the way they will look at money as adults. Another way of making this happen is by helping them plan and budget their monthly allowances.
Budgeting Is Important
Instead of spending randomly on the go, they need to understand why budgeting is crucial. Making a plan according to priorities is key to making a great budget. Teach them about the essential components of a rock-solid budget. Thinking about long and short-term expenses and planning accordingly. To make it easier for them to understand, you can use simple examples. Read more about it here – How To Help Your Children Understand Budgeting
Patience Goes A Long Way
One of the most crucial lessons in financial management involves something many of us lack—patience. Teaching them the basics of how Recurring and Fixed Deposits work will surely be a great help for them in the future. This way, they’ll learn the importance of investing in the right places and being patient enough to see their investments grow. Gradually, as they get older and start understanding various money-related concepts better, you can slowly start telling them about Mutual Funds, Saving Schemes, etc.
Think First, Spend Second
Among other things, teaching your kid when to and when not to spend is quite important. Most of us have the tendency to start spending as soon as we receive our salaries. Unless it’s the rent, utility bills or something urgent, it’s better to make a budget before spending on random things.
This habit will help curb their tendency to make impulse purchases as they grow up. So, when they go to the mall to buy clothes, you can be assured that they’ll buy just that instead of coming home with a 55’’ LED leading to a huge Credit Card bill! That doesn’t mean they can’t buy an expensive TV if they want to. It just means that they need to plan better and compare various offers before randomly buying the first TV they see.
One Solution To Most Money Troubles—Savings!
You need to teach them the art of saving. Once they master that, there’s no looking back. This is one of the most difficult but significant lessons. Turning this lesson into an experience is a better way to go about it. If your child wants to buy an expensive toy, don’t just give in to their demands. Instead, help them save enough to be able to buy it themselves. This will surely turn out to be one of the best experiences of their life and will also teach them the joy of saving.
Additional Reading: Top 6 Savings Bank Accounts Of 2018
Tracking Is Important (And Fun)
Most of us dread keeping a record of our spending. We rely on those fragile ATM receipts and shopping bills that just make our wallets messy and are of no use! You need to teach your kids that tracking their expenses can be fun. Try turning it into a little game to keep them entertained. Once they start looking at it as a useful tool instead of a boring task, your work will be done.
In case later they become too lazy to track their spending, the BankBazaar mobile app will still be out there to be their money-manager.
One Wish At A Time
It’s okay to pamper yourself every now and then but over pampering yourself can turn out to be bad for your pocket. Teach your kids to make a wish list. Tell them it’s okay to spend on such things as long as they have it all under control. This will also help them understand the priority order of things and spend accordingly.
Feel prepared to teach your kids everything about money? Good luck! Before you go, don’t forget to check out some great deals on Loans and Credit Cards.