Children must gain practical knowledge of money to live a good and secure life. This learning comes through observing parents’ behaviour in terms of how they manage their wealth, as well as the habits that they strive to promote in the household. As per the 11th Annual Parents, Kids & Money Survey held by T. Rowe Price, one major drawback was that almost half of the parents are reluctant or miss opportunities to share financial knowledge with their kids. On the other hand, half of the surveyed children were eager to learn about money and how to handle it and wished their parents had taught them more about it.
Despite being burdened with work and other responsibilities, parents can take up easy and foolproof ways to instil good financial values in their children. A brilliant way to do this is via entertainment. There are many movies around this theme, and we are here with some suggestions! Take a look at the list of the top 10 money-movies to binge watch .
Apart from this, take the routine approach. Values of wealth management build over time. To make sure your children are on the right track, follow these ideas every day:
Start giving financial lessons to kids even before they turn seven. This is because, as per research, money habits are instilled within them by then. To begin with, explain to them the difference between coins and cash and what they are used for. Take them to stores and show them how transactions take place. At a later stage, you may also teach them how a debit or credit card works, thereby introducing them to the idea of loans and timely repayments. Lastly, give them a copy of the receipts to analyse the payments for a better understanding.
The first thing kids will associate with money is that they can obtain things by exchanging them for the desired object, making it almost a magical tool to get what they want. Therefore, it is essential to give them an idea of the other aspect as well, namely savings. Learning to save money is not just a necessary habit but will also improve their sense of financial planning. Kickstart this habit by giving them a savings box or a piggy bank where they can store their cash and coins. Kids can be further encouraged by setting short-term goals for money-saving, such as collecting funds for a toy they really want. This plants the idea of self-sufficiency that they can achieve by buying things from their savings.
Giving kids their own allowance is essential for behavioural growth and maturity when it comes to building decisiveness and handling finances later on. However, make sure that they understand the effort that goes behind earning money. Before giving them an allowance, make them earn it by performing a task. It could be simply cleaning their room, finishing their homework on time, or any such activity. Kids tend to treat money obtained from hard work with more value and are more careful about what they spend it on.
Break the amount you give to your kids into four parts and pay them every week. This is a genius and foolproof way to instil smart spending habits within your kids because they are bound to always be on a budget. If they want something that costs way more than their allowance, they can plan and spend accordingly. This will give them a practical experience of budgeting, which they can easily incorporate into their life once they start earning. It also gives them a sense of freedom and a responsibility to be mindful while spending.
Investing can be a complex concept for children, so you may wait till they attain a basic understanding of money matters. Once they are ready, start by taking them along when visiting a bank. Explain how the banking system works in easy terms, the benefits of depositing money in terms of returns, and how certain investments work. This will familiarise them with the concept of banking, making it easier for them to make the right financial choices once they are old enough.
Through financial lessons, children often tend to inculcate certain life values too. These do not just teach the value of money and its proper management, but also the importance of extending a helping hand to others. Teach them about the realities of the income divide and disparity between different sections of society. It gives children an overall sense of how the world works while they imbibe sensitivity and the value of charity.
How you spend money in front of your kids sets an example for them. Children mimic parental behaviour and develop a personality that they are familiar with. To ensure that your child is on the right track, be mindful of your habits. Moreover, you can talk about finances while spending time with them, adding a little lesson in conversation or sharing your own experiences. It is crucial that they learn from the mistakes you made to avoid falling into similar traps and harmful patterns.
It is vital to inculcate a sense of money management in children from the very beginning. It makes them aware of how finances work at a very early stage, so they are not clueless when handling their income and expenses in the future. It also exposes them to various possibilities and ways that allow them to compound their wealth. Moreover, it is a practical step to take them along when interacting with financial experts. With a will to absorb knowledge, they may catch up on concepts that you miss out on. Experts at TejiMandi help you understand the intricacies of finances and manage your wealth to earn the maximum possible returns!