There is no denying to the fact that parents want the best for their children and help them in every possible way to make them better individuals. While children receive formal education from educational institutes, the traditional education system teaches them almost nothing about money.
Hence, the need to teach money lessons or help children form good money habits fall on the parents.
On this Children’s day, we show you some of the easy ways that help your kids to inculcate good money habits.
1. Explain to them the difference between Needs and Wants:
It is normal for kids to demand things from their parents. Many things will catch their attention. However, is it required to buy whatever your kid wants? Absolutely not!
Whenever your kid wants a particular thing, ask them why they want it. You can follow up with several other questions such as asking them about other alternatives that they already own. You can explain the concept the need and wants. This may help them to cultivate good spending habits in their later life.
2. Give them a budget
Instead of heading to their whims and fancies, give them a specific sum of money on a weekly or a monthly basis. The allowance may vary from time to time.
Also, let them know that they may get over and above their allowances if they help around the house such as getting groceries or doing other household chores. This will help them to understand the value of money.
The value of money is one of the most important money lessons that are going to stay with them for their entire life. The key is to make children realise that everything comes with a cost and they need to plan and work for it.
3. Help them to cultivate saving habits
In this age of instant gratification, cultivating savings habits has become the need of the hour. Typically, parents give piggy banks to their kids to help them save their pocket money or the money that they have received as gifts from various relatives.
Gift them a clear glass piggy bank found on various shopping sites. As the amount of money is visible through a glass piggy bank, it may encourage your child to save more and help them to prioritise their financial goals over other things.
If they have multiple financial goals, you can give them piggy banks as per their goals. You can also buy some mason jars and ask them to label it with their goals.
4. Tracking their savings and spendings
Helping your child to track their savings and spending will result in good money habits as an adult. Before they begin their savings journey, tell them to keep a note of the amount that they are saving in a diary. Once they achieve the required amount, they can open or break their piggy bank.
Also, motivate them to keep a tab on their spending. This will help your kid to keep a track of their pocket money or save more if they wish to.
5. Include your child in money conversations
Many parents make the mistake of leaving out their children from some of the critical money conversations. Include your children when you are drafting the monthly budget, or planning to invest as it will also make them familiar with the different aspects of money managing.
Also, try to bring your children when you meet your financial advisor. While they may not understand most of the things, kids quickly absorb and it helps them to build a perspective.
6. Be the financial role model
Kids learn a lot by observing elders. Hence, it is important to become the financial role model that your kids might follow. While parents must make their children understand the value of money, parents should be mindful of the way they are spending money, where they are spending money, and how much are they saving or investing per month.
Conclusion: Habits cultivated at a tender age has a long-lasting impact. Money habits are no different. With the lack of financial education, parents and elders need to help their children form good money habits.