Inculcate the Art of Managing Personal Finances into a Child

23rd

 

Values, Morals and Discipline are the three other pillars that mould a child’s future along with the pillar of education of course. One main concept that plays a major role in building the foundation for these pillars knowing the value of money and how managing it in the right way makes life a smooth sail.

It is easier to inculcate the art of managing personal finances into a child when they are still in their tender age because of their immaculate capacity and ability to grasp and learn new things.

Here are a few tips to help you make your child money’wise’.

  1.    Have a moderate tone

Remember children are very observant, they are watching your every move and that in turn will affect the way they react and behave. Whenever you speak of money matter in the house be wary to have a moderate un biased tone. This will educate them about how much importance money should hold in their lives when they grow up.

  1.    Share your bills

Make it a family routine to sit down together and talk about the bills that come home. Show your children the difference between variable costs and fixed monthly costs. This was they will be aware that the water bills depend on how much water is wasted when they leave that tap on. Make them know that they are helping save the earth when they turn off the lights when they leave a room or switch off the devices that are not in use. At the same time let them know that there are some costs that don’t increase because that was the amount that was agreed upon.

  1.    Talk about How and Where you get money from every month

Come on, your children are smart enough to figure out the how and where. What you can do here is increase their knowledge by telling them how the money you get enables you to pay your bills, buy groceries for the house and let’s not forget those super cool toys!

  1.    Sow in the seed of saving

If you sow the seed of saving into your children’s minds early on they are sure to have a lush green money plant in future. Let them know that saving money will help them face any future emergencies that may occur in their lives. It also helps them ensure a sound future for their children along with any road blocks that life’s journey brings them to, and let’s not forget them leading a comfortable retirement.

  1.    They Learn what they do

Everyone gives their children a monthly or weekly allowance. How about you add a little something to this routine activity of yours. Again you can involve your whole family in this activity where all of you have fixed working hours during which the children can help around the house with the bigger chores apart from the smaller ones which they are already entitled to do. At the end of the day or week they will get their allowance. Tell them that they have to save some of it first so that they can use the rest for their enjoyment. This will enable them to prioritise in life.

  1.    Encourage them to open a checking/savings account

Empower them with the responsibility of decision making. Show them that they can have more fun than what they are having now later on once they start saving money instead of spending all of what they get on fun. At the same time let them know that they can also live in the moment even while they save money.

  1.    Educate them on credit cards and expensive vehicles.

Make your children wary of why some cards are better than others and why you should invest in a vehicle that caters to all your needs primarily instead of your wants. This is only to lay a foundation for how you should spend your money, you can always leave the details for later when they are a lot older.

  1.    Tell them Why you buy

Children have a never ending supply of whys, you all must know. Why not answer a few of them. You can tell them why you decided to buy one particular product over the other, say for example why you purchased a 5-star Refrigerator even though there was a cheaper 3-star refrigerator available. Here you can explain to them that 5 stars stand for more energy efficient as compared to the 3 stars. This enable them to realise that forward thinking will help them make wise spending decisions.

  1.    There is a thin line between ‘need’ and ‘want’

Of course they would want the new Star Wars Darth Vader Lego kit, but they also did have a fall during play time and scraped their jeans. Let them know of the advantages and disadvantages of every purchase you make, while talking about your income and budget. When the children learn of this early on in life they become efficient in making trade-offs later. This has a hidden benefit of making kids value what they get and take good care of everything they own.  

Making your children money’wise’ helps them understand how the monetary system works, and how to make it work for them. Sow the seed and the let the money plant grow, grow and grow.