Children are smart, observant, quick learners, and are grow up faster than you can imagine. They develop needs, wants, and lifestyle habits at an increasingly younger age. Here are money lessons you’ll be glad YOU taught them early.
Children have access to more information, resources, and their innocent minds quickly develop with healthy or unhealthy beliefs/thoughts that influence their actions, future decisions, and therefore, influence yours.
In this article, we’ll take on how to teach the children the ‘value of money’ .
#1: Making them value the necessity of Budgeting
Maybe at a very early age, they may not understand the niceties of drawing up a prudent budget. But over time, involving them in the budgeting exercise will reap manifold rewards; they’ll turn money-wise. Remember, children learn lot by listening and observing.
When you provide a certain amount for their monthly pocket money, explain the rationale. And preferably, give the pocket money in different denominations – #500, #100, # 50, #10 — so that they will be able to handle money sensibly, according to their needs and desires and come up with ways to save. Always insist that they write an account of how the money was spent, which will help them realize where they overindulge and thus, highlight the need to refrain from.
#2: Goal setting.
As children are prone to get carried away by trends; ask them to list down their short-term goals (such as buying gadgets, an expensive toy, cycle, branded clothes, shoes, etc.), and also long term goals. This will help your children prioritize and realize their goals understanding the benefits of delayed gratification.
Create awareness on the difference between a need and a want and how to set their priorities straight when setting goals on what and what they intend getting.
#3: Introduce a few money games
Kids love games, and these can be a great medium of learning. Board games like Monopoly, Game of Life (similar to monopoly), Cashflow (inspired by Robert Kiyosaki’s Rich Dad, Poor Dad teaches how to be in better control of your finances), Payday (teaches how manage your monthly budget) can impart a variety of tips on money management if shepherded prudently.
#4: Set forth a piggy bank or a bank account
Toddlers can be introduced to a piggy bank, and its purpose explained as they grow up. Initially, when you hand them smaller denominations to deposit, teach how much is being deposited. As they grow up and begin to receive pocket money, ensure they continue with the habit by saving money.
For older children, you may open a ‘savings bank account’, or to make this easy they can have a mini piggybank app on their phone ( Piggyvest a more recommended app for that) and park their pocket money in it. This’ll introduce them to ‘interest on savings’, basic banking transactions, investing. This will prove to be an inspiration to save more and invest money in productively. And overtime, it’ll gear them up for financial planning.
#5: Develop the art of giving.
Along with saving and investing, foster the art of giving. Help them realize that not all are privileged, and therefore when you’re one of the fortunate ones, serving the society by means of ‘paying it forward’ is vital. You see, giving is also an essential component of financial literacy; it seeds in empathy towards society amid the path to wealth creation.
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