So you’re shopping with your nine-year old daughter, and all of a sudden she squeals at the sight of a sparkly piece of accessory. You know for certain that she already has shelves overflowing with similar kinds of accessories, but she’s adamant that the one she has laid her eyes on is a limited edition. You can try rolling your eyes but eventually you are likely to give in. And that’s when you wonder, if it is time for you to step in and teach her the value of money.
Here are some tips to introduce savings and financial awareness in kids.
Health Is Wealth, Even In Finance
It is a good idea to remember that it is never too early to teach children about the value of a dollar and the earlier children are educated in prudent money management, the better it will be for them in the long run. Investment experts are also of the opinion that it is perfectly proper to call attention to a child’s reckless squandering, just as you would with any other issue. If you saw your child consuming more than 10 chocolates in one sitting, or idling on the bed all day long and getting no exercise at all, you would not bat your eyelid twice about saying something. Similarly, the same goes for personal finance. It is not possible to expect our children to have a financially sound mind if we are not pro-active in our guidance towards it. Making a child learn about good financial behaviour will get him to be sharper and alert in his daily expenditure. Parents must set up specific plans for spending, getting into an economical mode and making donations to charity.
Inculcate The Habit Of Donating To Charity
Together with your children, you can set the amount of percentage of the dollars towards each objective. For instance, one basic rule could be to give 10% to funds or NGOs, save 20% for future use and use the remaining 70% for purchases. As you put such rules in place, your children will start becoming familiarised with the concept that every penny earned is not supposed to be spent (consider: future taxes). To help your child get acquainted with this notion, introduce a multi-chambered piggybank as a novel concept of saving.
Continue To Stay In Charge
In some cases, it might be difficult to convince children to save. Some children who tend to buy whatever they see may not be so welcoming with the idea of saving or donating to charity with the amount at their disposal. If all else fails, as a parent you would need to assert your position and firmly stand on the situation without swaying to their demands.
Expect Mistakes From Them And Correct Them Gently
It is perfectly normal and healthy for kids to make mistakes with regards to their money. Money experts and psychologists are of the opinion that when children are introduced to financial savings, they should be allowed to make spending errors so that they will be able to learn from it. For instance, after a couple of weeks, ask your daughter if she is pleased with the sparkly piece of accessory purchase. If she responds by saying that she wished she had never spent that amount as it is still burning a hole in her wallet, then ask her how she would change things differently the next time. Interacting with kids and working with them on the issue of saving can help in building their confidence and learning from their mistakes. However, be careful not to get into a lecture mode but rather converse with them in an engaging manner about how the choices they have made has created an impact on their savings ability.
About Manmohan Hebbar
I am the founder and director of 01webdirectory.com and chief editor at 01webdirectory.com/blog.
Finance and kids can be tough – at our house they have to put 50% of what they earn in chore money in the bank!