Money is a daunting subject for many. The earlier we get introduced to money matters, the better we handle them. So, teaching your children simple financial lessons now will go a long way in helping them in the future. Teaching kids about money is especially important if you’re going through tough financial times. Lockdowns are difficult and complex. But it gives you quality time to engage with your children.
Here are a few quick exercises/ money lessons for your children:
Most young children struggle with counting money. Play shopkeeper and present simple addition and subtraction problems. This is a fun and practical way for children to learn.
Introduce older children to the power of compounding. And show them where compound interest applies. Few classic financial examples are equity investments and your PPF account. The coronavirus pandemic is compounding. Tracking these numbers can show the stark difference between simple and compound interest.
Set your child up with a piggy bank or their own savings account. Encourage them to save a little money each week. These savings can stay in the piggy bank, a savings bank account, or in mutual funds. Most mutual fund schemes accept investments as small as Rs. 1,000. Parents could reward work (chores and grades) with pocket money.
Household Budgets & Expense Estimates
Get your children involved in your household budget. Play a fun game where they estimate grocery bills and learn the prices of everyday items. You can assign them the responsibility of tracking all expenses. Try the Kakeibo method. The learning comes from cross-verifying expenses with actuals. They can draw up household budgets based on their findings. To do this well, routine exposure to money matters is a must.
Actions Speak Louder Than Words
Children learn a lot more from the actions of the adults in their lives than most of us realize. It’s much easier to learn from behaviour than theory. Kids are conscious of their parents’ shopping preferences. Impart valuable money lessons by explaining your choices and looking out for discounts.
Correct Wrong Money Messages
We all want to do what’s best for our children. It’s every parent’s duty to inculcate financial responsibility. Always saying yes to every whim and fancy does the opposite. Save the spoiling for special occasions. Let them understand that money has value and is of finite supply. Spending must be conscious and not impulsive.
At the same time, make sure that your children don’t develop financial anxiety. Introducing them to money can be overwhelming. Keep an eye on the attitude that they develop towards money. It should be well balanced – where they value it, but it doesn’t become a source of worry.
Needs Versus Wants
The most valuable money lesson your kids require is distinguishing needs from wants. Draw examples from your learning curve. Make it personal so that the lesson sticks.
Involving teenagers in family discussions about expenses and purchases. If you’re buying a new appliance or a car get them to do the groundwork. Let them compare products, features, and pricing.
If it goes above their head, guide them. Initiating them into the process of decision-making matters.
Set a Family savings goal
Allow them to contribute to a family goal – it could be your next fun family outing, a board game, or a vacation. Make sure your children understand what they’re doing and why they’re doing it. You’ll be surprised by how much they’ll pitch in. When the time comes, they’ll experience the magical reward of saving. Kids will learn that effort takes time to reward them.
The way children perceive money will often carry through into adulthood. So it’s important to give kids a good financial grounding early. Piggy banks, budgets, and household purchases will prepare your children for bigger decisions. Remember, in a few short years, they’ll be talking credit cards, cars, and houses. So, make them financially savvy early!
The lessons you teach them now will sink in deeper as they grow. Have you taught your children other money lessons? Comment your ideas below!