As parents, do you find yourself giving in to every little demand of your child? Do you find it hard to say “No” to the apple of your eye? After all, childhood comes only once, doesn’t it? Why deny your child when you can very well afford those flashy shoes, helicopter rides and nifty tablets?
But now step back and think a little. Ask yourself, how such an indulgence might affect your child’s outlook in the future. Would it give your little one, the power to manage their own finances? Would it help your child navigate through a sluggish economy with ease and competence?
Money wise kids make financially prudent decisions in their adult lives, do not let financial hassles rule their lives and are generally a contented lot. Follow the tips listed down below to raise money wise kids:
#1 Start Early
Your child is never too young to understand the concepts of saving and thrift. Weave your money lessons into tales. Instead of telling your child to save, tell them the tale of a little boy who did not spend his pocket money on chocolates but instead saved it for six months to buy his favorite toy truck. Explain to your child very gently that not everything in the shopping malls can be purchased. By doing this you are teaching your child the importance of financial goal setting and living within your means.
#2 Entrust your Child with Responsibility
Sometimes parents, in order to stop their children from turning into spoilt brats, keep throwing the “No” word to their faces. However, such denial sometimes fails to achieve its objective of making the child financially responsible. The next time you visit a market instead of denying your child give your child a list of items that you need along with the money and tell them to make the purchase. By doing this, your child not only becomes responsible but also becomes aware of market rates, discounts etc.
#3 Inculcate Allowance Lessons
The manner, in which your child spends or saves their allowance will pave way for future financial habits. Here are a few lessons you can teach your child:
- Teach your child to spend their allowance wisely as opposed to reckless purchasing. Example: Splurging on an expensive watch which your child never really needs is reckless spending; spending on books is a wise decision. Also encourage your child to save a percentage of their allowance every month.
- Make a careful assessment of your child’s needs before fixing their allowance.
- Do a thorough evaluation of any raise request.
- Refrain from terminating allowance as a disciplinary action.
#4 Open a Savings Bank Account in your Child’s Name
These days it is easy to open minor accounts along with the parents' accounts. Do this for your child. When you do this, your child feels important and more responsible. Take your child to the bank and let them absorb the experiences there. Also explain to your child the concept of compounding and how money grows. When your child watches the various banking activities the money lessons begin to make more sense and create lasting impressions on mind.
#5 Let your Child write their Personal Finance Lessons
Right from childhood, you need to teach your child, that there would be some days, when money is inadequate and they might have to let go of something they have always dreamt of.
For example, your child’s savings might not be sufficient to buy the much awaited Hot Wheels Race track. In such cases, your child can either choose to wait till they have saved enough or let go of the toy. This is when as a parent, you need to steel yourself and not offer to bail them out immediately. You can loan the money instead with an undertaking that they will repay the loan in full. Discuss the repayment schedule with your child. Children love it when they are trusted and asked to make a decision. Also by doing this you are instilling in your child the lessons of planning and management which will hold them in good stead in the future.
Money wise kids not only make good finance managers, but are also savvy decision makers. Impart the right money lessons to your child, so that they grow into independent, mature adults who do not shirk from financial responsibilities and fulfil them competently.
Sridevi Datta is a Cost Accountant. After working as a Business-SME in a leading E-learning centre, she now blogs regularly at The Write Journey.
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