Even after such advancements in technologies and the vast open-information base available to learn and understand, children of this generation still lack financial literacy. Children believe that money miraculously comes from their parents’ wallets to provide them with everything they desire. Sadly, not much has evolved from the previous generation to the current, which is alarming, particularly when you have spent years and years of your hard-earned money hoping that your child has the most effective higher education available. Though providing them with the best form of higher education is your moral responsibility as a parent, but what kind of benefit is it if your child doesn’t recognise your efforts?
What if, on the other hand, you take out a student loan but your child isn’t financially in charge to repay it? Not only will you be in financial trouble, but your child is going to accuse you as well for the loan burden. It doesn’t appear fair to them that one day they’ll be saddled with the obligation of paying off their higher education loans. This is why, when it comes to parenting our children, we must get it accurate. If you want your child to become a sensible adult who is capable of handling their finances properly, you must start teaching them finance at a young age. Whatever they accomplish in life and how they deal with their life’s inherent achievements and losses, practical financial education will be something they will undoubtedly require at a young age.
Cut-off the myth that ‘Money is a taboo’:
Many parents believe that money should not be a topic of conversation in front of their children. They believe it is their responsibility to shield youngsters from the “stern aspects of the world.” Schools also do not teach the notion of money, which is an absurdity. As a consequence, many youngsters grow up in a world of privilege, ignorant of their obligations in life.
Money, on the other hand, is not a bad thing. For a youngster, it can also be associated with enjoyable activities such as dining out, seeing a movie, or purchasing toys. And, because these are the only expenditures they are interested in, you can teach your child about money in three straightforward stages.
Step #1: Know how money works
A youngster should understand about money and how it works, from as young as age seven or eight. This can be done in a pleasant way without being bogged down in tedious calculations. Rather, demonstrate how you spend your effort and time to acquire money for food, education, good health, and other purposes.
You should also clarify what takes place with the money once you have given it to somebody else. Here’s an instance that will help your youngster comprehend this concept: whenever you take your child out to shop, explain how you pay money to the shopkeeper in order to purchase the toy or any other item. The shopkeeper subsequently takes a portion of the money that we pay as his profit and utilizes the remainder to pay their staff and to the other expenses such as the shop rent and for his purchase from the wholesale dealer. Staff members in the shop, too, have family and children, and what we pay for the items that we purchase is their salary, which they in turn spend to support their child’s education. As a result, your child may basically understand how money works in simple words, resulting in them being more interested in the stages that come next.
Step #2: Make them understand the concept of saving
Open up a joint bank account for your child when he or she is approximately 10 or 11 years old to offer them practical experience with saves, interest, and investing. Give your youngster a set monthly stipend, maybe Rs.1000. Instruct them that if they save a certain amount of this 1000 rupees at the conclusion of the month, it will increase. In this manner, your child may experience the power of saving money practically first-hand. With this illustration, the concept of deferring pleasure is brilliantly emphasised. The youngster notices that if they overcome the need to spend right away, their money grows in value. This concept will be useful to them as adults, particularly in today’s environment of materialism and commercialization.
Step #3: The Shift to original finances:
In their mid-teens, your kids must start to discover how to manage some of their own spending. The bank account can now convert to a real savings account. You might offer them a weekly or monthly sum of money in order that they can plan their financial affairs. This would require them to be financially accountable first. For example, reducing back on junk food so you can pay for a phone recharge would be wonderful lesson in finance for the prospective adult.
Three crucial lessons for parents today to financially empower their children are discussed below.
1. Familiarizing finance-related technologies – Children nowadays are nearly grown with smartphones in their hands. They are given accessibility to sophisticated tools like online banking and UPI. It is critical to advise them on how to use these functionalities. Demonstrate them how UPI functions and assist them in transferring the funds. This will provide your youngster with first-hand knowledge of how tech operates while also protecting them from online fraudsters.
2. Distinguishing ‘needs’ and ‘wants’ – With the help of in-app buys, kids can now easily shop wherever and whenever they want. Hence, teaching children to differentiate between necessities and wants is critical. You may do this with a simple trick: urge them to wait at least 30 days before purchasing an item. This will assist them to determine if the item is a “need” or a “want.”
3. Tracking money – This will teach your child the importance of money in current dynamic society. If your child can keep a record of their costs, it will help them plan their pocket money accordingly.
Final thoughts:
Despite the fact that knowing how to handle money is a critical ability that we all require, very few kids receive this instruction in school. Even if they do, there is a gap with real-life situations, as there is with numerous other subjects we learn in school.
Hence, the parents bear accountability on their kids’ financial knowledge. Only by making your child financially informed and capable will they appreciate the work you put in to save for their higher education. Only then will they be emotionally equipped to pay back their education loan or not squander away their tuition fees. Only then will they be able to express their appreciation to you, because this could end up being the most precious gift you ever gave them.
