It is believed that children are quick learners and adapt to situations or conditions easily. As adults, we play versatile roles that of parents, teachers, friends and guides. Not just that, we have experienced our share of manning financial setbacks etc.; and it’s time to pass on financial literacy to the younger generation to make them fiscally smart. While children are inculcated with constructive habits and values; it is highly essential for adults to instil in them the habit to manage money. Read to know 5 key financial lessons that she be taught to children;
That’s how it works, my child
Children are too young to understand the complicated realm of finance and it’s inadvisable to load them with finance jargon and concepts. However, simple facts can be explained to them, because children have the ability to grasp things early. Start with telling them what is money, why is it important, how is money used and promptly answer all their questions. It’s advisable to explain them with stories, tales or metaphors for their easy comprehension. As they grow older, teach them more about currency and coins and importance of saving. Children are very curious about the origin of money, because they often see their parents or other adults get them what they want by giving something in return which they assume, they always have. Tell them, that money is a kind of a reward one gets after an activity called ‘work’.
Enough for needs and no for greed
One very important lesson that should be imparted is the difference between what is needed and what is wanted. Children are desirous of all things that catch their attention. From the latest video games on the stores, to the newest candy on the counter, and of course to the swankiest gadget etc. their wants and fancies will change continuously. As a responsible adult, it is crucial to make them realize the difference between what they find attractive and what is actually necessary. Children should know that the difference between a fancy mechanical pencil and a basic pencil is just how it appears and the function remains the same; however the fancier one is a lot more expensive and may not even last longer.
Early to save, makes one wealthy and wise
Like mentioned earlier, children follow the footsteps of their parents or elders. It’s extremely important for parents to present themselves as fiscally prudent. Parents, who are generally cautious about spending money or investing it, pass it to their offspring’s inherently. However, to develop the habit of saving early, children should be made to realize the importance of saving and how to save money. The piggy bank is a classic example to get children started with saving. If they save whatever money they get; in the form of monthly allowance, prize money or cash they get from relatives and accumulate them in their piggy bank, then this could help them to buy something that they like, or buy something expensive. It could also serve as a mini contingency fund, for instance, if they run short of money by the end of the month, then instead of asking others, they could use the money in the piggy bank wisely.
There are no free lunches
If you’ve laid emphasis on the importance of money, it is also essential to make them understand the importance of budgeting and managing finances within that budget. The next lesson is to make this financially prudent is by fixing a monthly allowance or pocket money. Children should be made to understand that they will receive a little sum of money every month, the way adults receive their salary. Communicate to them that within this budget, they can spend to buy themselves i.e. sternly, yet subtly explain to them that this is all that they will get for the entire month and they have to budget themselves accordingly. After all, they’re aware that money does not grow on trees.
Put your foot down
Despite explaining them the differences and telling them the importance of money, children will take time to actually realize and be fiscally smart. There may be times when they run out of their pocket money, lend money to their friends or borrow from friends. Often parents give in to the whims and fancies of their children and give them extra money just to satisfy their demands, but, it is equally imperative to make them realize that this shall not be in favour as they start growing up and begin to face the real world. If they ever fall short of money or ask for more for any trivial reason, then as a dutiful adult, children should be reprimanded for it. Tell them that shall only get money in the following month and not before that because they failed to save or spend it wisely; and they’ll learn their lesson right.
