In our society, it is a natural instinct to shield children from any kind of hardship as far as possible. While this comes from a place of concern, affection and the urge to nurture the child, grown-ups often get swept away in these emotions and keep children shielded from some aspects of life that are extremely important till a very long time. Money matters is one such area. Not showing financial problems or making them money-minded is one thing but giving them no or very little exposure to financial responsibility, money management and financial discipline pushes the sentiment across the lines of prudence. From a young age, certain concepts of money management must organically be imparted to the child via life lessons, small activities, actions of transferring responsibility, etc.
By doing this, you are not showing a financial shortage or hardship to your child, but you are explaining to them that life is about managing what you what within what you have and taking responsible financial actions.
Here are some simple habits to inculcate in children:
whether or not you use the traditional piggy-bank, kids must understand the concept of pocket money- managing your needs from a definite supply of money. Even if it is just to buy their favourite candy, teach them that there are going to be “have this or have that” decisions they are going to have to make in life.
Make them read price tags of things that come into the house, especially for them. This innocent habit makes them conscious about the value of money and things it can buy. This can also help with making their elementary level math stronger.
Set small achievable goals with your child and help them achieve it. A lot of grown-ups take years to understand how planned savings and investments help to realise financial goals. If the child grows up understanding this concept, they would start their investing journey (when they start earning) in top gear. Examples of such goals can be buying a chocolate/gift for a family member, buying something for a pet/community animal, etc.
While it may not be prudent to discuss all financial affairs in front of kids, make it normal to discuss some money-related things(even if as simple as opening a bank account, asking the bank balance, paying off a credit card bill, paying tax, starting MF investments, etc) in front of the child. This way, money talk won’t be that topic they are too intimidated by as they find it as normal as talking about any other aspect of life.
Make sure you take them to the bank once in a while or make them meet your financial advisor, insurance agent, CA, etc. As the child grows up, they will be as comfortable approaching any of these professionals as they are meeting other people they have grown up meeting. These professionals may teach them a thing or two about money too.
Make them part of money discussions as they grow up. Again, nothing heavy-duty but something as simple as deciding between two resorts while making holiday bookings, deciding how much money can be set aside for savings in a particular month, etc. Ask them what they feel about it. This inculcates confidence as well as responsibility in children.
Make them understand that earning money is linked to efforts put in. They will respect the money that comes into the house and the grown-up that earns said money. This can be done in simple ways like giving them a mock “summer-internship” to help out at home or linking treats like ice-cream, etc to a certain weekly task they are supposed to do.
These simple ways will go a long way in making your child understand the value of money and at the same time not be intimidated by the idea of taking money decisions themselves. They will look forward to earning, saving, investing and achieving their financial goals, because they have seen a glimpse of it all through their childhood.
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