Importance of Good Financial Habits for Children
Teaching kids about money is as important as maintaining their health and caring about their well-being. Children grow faster and a habit which they adapt in childhood remains with them for their lifetime. Giving your child good moral values is the basis of life and it’s the responsibility of parents to encourage them with good habits and moral values.
Money related good habits are one among such habits which patents should pass on to their kids. This helps them in a great way to stay in control of their finances later on in life.
Remember, a child learns from his/her parents and tries to copy them as children always consider their parents as their role models.
But what lessons should pass on? And another question which arises here is, how?
Well, every family works differently, but below we have outlined some money lessons that should be taught in a household to the kids for a better financial life ahead.
- Teach your child the value of money.
- Teach them the difference between needs and wants.
- Teach them demerits of overspending.
- Reinforce them about the budget.
- Provide your child pocket money to check their expenditure habits.
- Educate them on the importance of savings.
Talk About Money
Parents should mostly communicate with each other about household spending, saving and finances in front of their children. Doing this will gradually and subconsciously become a financial template for the child to work with and discuss those things with their parents.
Discussing finances in front of kids and teaching them money lessons makes them aware of the value of money.
Teaching kids the importance of money will encourage them to save and multiply it.
Make them Work for It
Education is the basis of employment, and employment is the base to earn money.
Teach kids the importance of education, if your kid knows the importance of education and he/she is working hard to grab it then half of their life is sorted. Reaching a level after lots of struggle, make them realize the value of money itself. This way a teen becomes a better person who has the saving skills within them.
Importance of Budgeting
Teaching your child how to manage money to help them organize their finances at a young age. Budgeting makes one’s discipline to live within limited means. To implement this give them pocket money and let them decide what to do with it. This makes your kid manage the inflow and outflow of money, and help them learn the importance of the right spending.
Difference Between Needs & Wants
There is a very thin line between your needs and wants if you don’t understand it properly. But when you are able to understand it properly the difference will be vast. Your needs are something which is important to you for your survival, whereas your wants are your wishes & desires to live your life comfortably.
Let’s understand this by an example-
Suppose you are a middle-class person having 10 years old kid. You buy him a new school bag as the old one got torn, the kid asks for a video game next month. Here the school bag which he got was his need but the video game which he is demanding is a want.
If you want your kid to know the difference between needs and wants, you have to teach them lessons from the beginning and have a track on their spending and purchases made from their pocket money.
Making and Achieving Goals
Making goals and working hard to achieve them is the basis of any achievement. So, it is important to teach your kids the importance of Goals. To accomplish it you can start with a financial goal.
Encourage them to set a month-wise goal. For example- it can be shared with a goal of saving ₹ 500 from their pocket money. If the first goal accomplished successfully, you have to encourage them for the second goal or to set a goal which will be for a long duration as compared to that of the first goal.
This will create a sense of how a lot of cash they can spare e monthly.
Making Money Grow
This is an aptitude that is regularly given a miss by most guardians until the kid is a grown-up. It is, nonetheless, a smart thought to disclose to the youngster how money can be grown. Though investment is the best way to grow money. But you can’t teach a kid to invest. So, to teach your child, you can teach them by giving the example of the piggy bank. Show them the money is kept in their piggybank remain as it but when kept in a bank savings account, or FD account it grows.
Kids are very smart these days and learn anything quickly, so if you want to shape your kids’ life, it is the best time to teach good things and pass on our good financial habits.
The better the financial behaviour they see and learn, their life will be better and more financially stable in the long run.