Every parent wants the best for their kid, including financial freedom. This is why parents in India fund their children’s higher education and wedding. Despite having strong academic backgrounds in their respective fields, many children struggle financially. This blog is a good read for parents who are trying to teach their kids about money and prepare them for financial autonomy.
We teach our kids how to walk, talk, and make friends. We take them to extracurricular events and birthday parties while helping them with their school projects as well. But parents typically forget to teach their kids the fundamentals of money management. Being mindful of your finances is a strategy that takes time to become ingrained in your behaviour. Nowadays, many people still struggle with knowing when and how to save. For a safe future, financial planning is crucial.
Thus, it is crucial to provide basic financial knowledge to children. Children should be told about money issues. The most crucial step in attaining financial transparency is to foster a conversation-friendly environment at your home. Children could inquire, “Why can’t I buy this toy?” and “Why only two candies?” Situations like these may be great opportunities for parents to openly talk about money, morals, and preferences. In this blog-post, we will try to provide some simple hacks that can provide your children with the awareness they need to suitably manage money at any age.
Tips for kids aged 5 to 7 years:
Though keeping money in a piggy bank is a great method for kids to begin saving, use a transparent jar instead of piggy bank to give them a visual representation of their savings. Kids can see their money grow with every contribution when you use a transparent jar. Pay them for the task that they accomplish. For example, treat them with some money if they clean their bedroom daily for two weeks or if they clean their cycle for a week or help parents in washing their bike or car. Think about paying a set sum for each piece of work. This means, taking out the trash daily for a week will earn them Rs. 100, tidying their room for a week will earn them Rs. 200, washing the bike or car for a week would earn them Rs. 300, and so on. Putting a cost on the task aids in giving it value. Kids could find this to be a fun way to teach them the value of saving money.
‘Monkey see, monkey do’ is a common proverb that children often adopt in their doings. You must thus set an example for your children. Bring your kids to the bank or let them sit with you as you pay your payments online. By teaching your kids sound financial habits now, you’re preparing them to follow in your footprints when they’re older.
To assist them in spending their hard-earned money, take a few rupees from their see-through jar and go with them to the toy store. Let them select an item to buy with their money and talk about how they have earned that money. They will put a value on the effort they performed and the money they made once they realize that the item that they are purchasing was worth two weeks of cleaning their bedroom. Once they have made a decision to purchase anything, have them directly hand the cash to the cashier in the shop counter so that kids understand they cannot keep both the money and the item. By doing this exercise with them, they learn that goods do cost money.
Tips for Children aged 8 to 12 years:
We need to start teaching our kids at this stage that money isn’t always easy to come by and that we work hard to make ends meet. Display the opportunity cost of acquiring an item. “You won’t be able to see the movie with your friends tomorrow if you buy this video game today.”
Children between the ages of 8 and 12 frequently notice something and want it right away. Instead of giving into impulsive purchases, set them some boundaries. Tell them that if they want it, they must pay for it with their own money because it is not in their budget for that day. By doing this, they are frequently deterred from buying the item by the knowledge that they aren’t going to get it for free. We may even advise them to think about the item and come back to buy it later. Don’t be afraid to refuse your children’s requests. Not every outing has to result in an incentive or a product buy. We during our childhood days have not got anything easily from our parents. We had a clear ‘No’ from our parents from majority of the things that we ask them to buy. We just need adopt the same strategy.
Motivate them to give back to their community by picking a charity that they would want to support once they have a little money. Teaching them the value of giving back to society is the prime duty of parents. Instead of birthday gifts, propose that they donate a portion of their earnings or they can request financial contributions to the charity on their behalf.
Tips for Teen age kids (13 yrs to 18 yrs):
Opening a bank account for your children elevates their understanding of financial management, maybe enabling them to manage a bigger account when they’re adults. Some banks offer services that enable parents to instantly deposit child’s earnings or allowance into their child’s bank account, enabling them to make purchases with their own cash.
You might have already put an education savings strategy in place. If not, there is no better time to start than right now. Ask them to contribute to their higher education. This will give them a sense of ownership over their education and make them realize that they are making a contribution.
As soon as they reach the age of 18, particularly if they are in college, they are barraged with credit card offers. Teach children about the risks of using credit cards. Even if you teach them savings a bit late, it is still acceptable. But explain very early to them that taking on debt is a very bad decision.
Encourage your teenager kids to begin creating a basic budget. Now is the time to help your child with their budget plan, no matter how little the budget is. Start while they are still in the house. Start by outlining your financial situation, including where your money originates from, how much you expend each month on household expenses, taxes, and other costs.
Final thought:
Your children will learn to appreciate and comprehend money if you teach them about it in some of the above discussed manner. This will ultimately benefit them when they start making money after finishing their studies.
