Teaching kids about how to manage money is one of the biggest challenges parents can face which is very important to these days and should be inculcated in our younger generation. Mostly children take their money for granted. Although one is smart enough to know that money doesn’t grow on trees, but they think that their mom’s purse or dad’s wallet has endless supply of it. And in case, if their parents run out of cash, all they have to do is go to any ATM machines which are scattered around the country, take out their plastic(credit) card and can get all the desired money back, so very simple isn’t it?!
Now the best time parents can teach their children about money management is in their childhood. This is because young children are receptive and they are quick to learn and adopt good and bad habits. Once your kid is on the root of spending money wildly or way to spendthrift, it becomes very difficult to change it.
Talk to them about money: Parents need to teach their children how money is earned and what difficulty one goes through to earn money and that parents have a limited amount of money to spend each month. They should also be made to understand that money is mostly spend on important stuff like paying education fees, utility bills, food and health and how every bit saved can be utilized for their own better future.
Help them differentiate between ‘want’ and ‘needs’: Now this can turn out to be very difficult and challenging for parents to teach their kids the difference between wants and need. The profusion or attraction in markets through advertisements, peer pressure and the desire of showing off in friends motivates them to buy expensive stuff. The best one can do to deal with these demands is to be very communicative and firm.
One can tell their children that having a branded school doesn’t mean better grades nor would a costly watch show a different time. Teach them to be satisfied with what they have instead of hankering after those which are beyond ones means. Never spoil your kids with expensive stuff even if you are rich. Children become bored easily, so if their every demand is fulfilled, it gives them no appreciation for their belongings.
Give an allowance: One of the best ways to inculcate the habit of saving among your children is by giving them certain amount of pocket money so that they learn the habit of saving a bit from their pocket money every month. Once you have given them the allowance, they should be given the independence if spending it too. They might mistakes and the beginning by spending of expensive things or buying useless stuff, but soon they’ll learn to make better decisions.
Teach them to save: If children want to buy something badly, they should be taught to save up for it. They can save money by keeping a money box and which they can put and save a little bit of money every month so that they can achieve their goal later. This will not only teach children about saving but they will also learn patience and negotiations and forming partnership with siblings.
Be a good role model: The key to success in teaching your children about money management is to be an effective role model yourself. Parents should display restraint when it comes to spending and shoe good sense about saving money. Children should see them make a budget and take sensible decisions regarding saving and investments. One should help their parents by not wasting water, conserving energy, going bargain hunting etc.