8 Crucial Money Lessons For Your Child

By BankBazaar | July 20, 2018

Here are eight absolutely essential things your child needs to know about money.

8 Crucial Money Lessons For Your Child

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.

Additional Reading: A Comprehensive Guide On How To Increase Savings Over Time

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.

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12 thoughts on “8 Crucial Money Lessons For Your Child

  1. AvatarMadhu Kapoor

    Very informative. Young parents can really learn from it as also modify to suit their special needs.

    Reply
  2. AvatarManju Kulasekar

    Insightful. It would be a learning experience both for the child and the parent… Good luck pearents… Try it out and do tell us your experiences

    Reply
  3. AvatarHemant S. Jambhale

    A thought provoking article. Simple ways to help your child learn the most important tool of transaction. Especially liked the idea of three boxes for spending, saving & sharing.

    Reply
  4. AvatarMadhu Kar

    Really very informative.Children should know the value of money n should know how to save it……

    Reply
  5. AvatarDr Renu Kamboj

    I agree with Points covered in the article…….I had been doing this for my children and am seeing the fruit of my efforts now….. wish GOOD LUCK to all young parents ……

    Reply
  6. AvatarDr.Beenu Singh

    excellent way of guiding parents about how to handle teens.

    Reply
  7. AvatarNRR

    Good one! Why not such real things can be part of school syllabus… ? 🙂
    Must one learn them by getting affected in real life… ?:-)

    Actually I am already doing several things mentioned by the author
    thanks for such a nice article….

    Reply
  8. Avatarbemoneyaware

    Great article with simple tips to start teaching kids about money. My two cents:

    Money is easily one of the most powerful, dominant and motivating forces on our planet today, In our world . But Money doesn't come with instructions or a training manual. And we are not born with money sense. As a parent, we are teaching our children every day not just by what we say, but by what we do
    Ex: -A 8 year old could name all his father's credit cards. He thought is is a good idea to have many credit cards.

    -If a ten year old likes to hang out at malls, spend today, how would be her spending habits when she grows up? Kids who really like spending money when they 10 will probably grow up to be adults who really like spending money.

    Our education system covers two main areas: the academics and the professional. But it lacks in imparting the basic information related to money. Parents of children as young as 4 are enrolling their kids in various classes so that their geniuses can get a 'head start' in life. Amidst all the classes that we push our children to take, we forget an important life skill: Financial literacy.

    The rules have also changed. Gone are the days of our parents when the philosophy was: Go to school, get good grades, find a safe, secure job with benefits, and stay there all your life. It is much better to commit mistakes with Rs 200 now then to commit blunder with Rs 20 lakh or crore later in life. The life-long benefits of teaching children good money habits make it well worth the effort. A starting step can be http://www.bemoneyaware.com

    Reply
  9. AvatarRakesh Aggarwal

    Really its very informative aand must be follow by everybody pass this article to your beloved ones.

    Reply

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