Raising children who are not just academically but also monetarily smart, is indeed the need of the hour. With the world, stepping into a faster mode of transaction, cash flow and money exchange everyday, it becomes extremely important to teach your kids the value of being economical and financially wise. In other words, being money-smart, right since their days of learning and growth, will certainly assist children in handling their finances well.
Bearing this long term perspective in mind, here is a step-by-step guide to help you inculcate the right economic sense in your kids:
1. Teach by example
Children generally tend to follow in their parent’s foot steps. If you, yourself are a spendthrift and spend money magnanimously, do not expect your children to practice economy. They will definitely follow suit. Thus, if you truly wish to make your children grow money smart, you need to first realize that they take each step by imitation, watching and observing you quietly every time you make a purchase. This simply means that you will have to give up on your cravings and exercise utmost restraint while shopping. As they rightly say, Practice what you preach!
2. Make good money choices
One of the basic lessons that you must give your child is about the variety of choices which can be made through appropriate use of money. If he/she begins to act stubborn about making a specific purchase, you need to tell him/her sternly that you will not buy what he/she desires; not because there is a lack of money, but because this way it will not be put to good use. Make him aware of the plethora of other ways that money can be spent in. Tell him that money belongs to the entire family and, therefore, it must be used to benefit each member equally.
3. Introduce piggy banks
There is a precise manner in which piggy banks should be introduced to your child. Do not give them away as merely a saving tool, instead help them breed the finest spending habits too. For instance, instruct them in the way they should save and spend money recovered from the piggy bank. A certain percentage from it can be used to fulfill their personal needs while the remaining must be equally divided by contributing to either the family income or a charitable purpose. Either way, your child is bound to imbibe the essence of gaining financial wisdom.
4. Have them plan and record details
Every time you use your credit card or the ATM, have your child write down the details. Ask him to pen down why the money was withdrawn and how effectively it was spent. More so, never make transactions amounting to large sums of cash while your child is around. Basic economic principles vouch for the fact, that the higher is the supply, the lesser would be the value. Thereby, by encouraging your child to participate in budget making with you, you are sure to open up new vistas for him/her. In this manner, your child will slowly but gradually grasp the relevance and significance of hard-earned money.
5. Share the costs
There is no reason for you to keep your child unaware of price tags, as most parents tend to do. Whatever you buy for them in specific or for the family in general, make the cost known to them. Seek their assistance in determining how useful a particular purchase was for the house. More so, if possible, have them bear ten percent of their own costs! For example, when you decide to go on an impulsive buying spree with them, firmly inform them that they would have to sponsor a few percent of whatever they buy for themselves. This way, they will be able to learn the techniques of money management quite early in their lives.
Economy, money and finances are undoubtedly one of the most vital aspects of our lives. Saving and spending wisely is nothing short of an art and as you progress towards rearing a money smart kid, you deliberately inculcate and encourage this art in them, in all its entirety. A kid who knows how to handle his/her finances well will surely be able to benefit immensely in the long term. Not only would they be able to harbor a futuristic vision, but they would also be able to supplement their approach with absolute monetary and economic pragmatism.
All said and done, when you raise a money smart kid, you don’t just rear a child– you bring up a cherished possession who would certainly prove to be an asset in the long run!
