Teaching Your Kids the ABC of Money

Every parent wishes for their child to be free of all troubles, even financial ones. This is why, in India, parents support their children’s higher education and marriage. Despite being intellectually proficient in their respective subjects, many children fare badly in financial matters. This story is an excellent resource for parents looking to teach their children about money and help them become financially independent.

As parents, we educate our children how to walk, talk, and make friends. We assist them with swollen knees, driving them to after-school activities and birthday celebrations. What parents frequently neglect is to educate their children about the ABCs of financial responsibility. Being conscious about money is an approach that necessitates time to develop into a habit. Many adults today have not mastered the art of recognising when and how to save. Financial planning is essential for ensuring a secure future. 

It is therefore critical to teach kids the fundamentals of money. Money problems should be discussed with children. The most important step in achieving openness in financial concerns is to create a discussion-friendly environment. Children may ask, “Why can’t I purchase this toy?” and “Why just two chocolates?” When parents handle these concerns honestly, such situations may provide excellent chance to discuss finances, family values and priorities. In this article, we will provide simple tips that can provide your children with the knowledge they need to properly manage money at any age.

■ Tips for Pre-Schoolers and Kindergartners

Use a Clear Jar to Save — While a piggy bank is a fantastic way for kids to start saving, it does not provide them with a visual. When you use a clear jar, children can see their money rise with each addition. This may be an enjoyable approach for children to understand the importance of saving money

Lead by Example — Kids follow the adage ‘monkey see, monkey do’. Bring your children to the bank or have them sit with you as you pay your bills online. Showing your children healthy money practises now will prepare them to follow in your footsteps when they are older.

Show Them that Things do Cost Money — Take a few rupees from their transparent jar and accompany them to the store to help them spend their hard-earned money. Allow them to choose an item to purchase with their money and discuss how they earned it. Knowing that one item was worth two weeks of cleaning their bedroom will place a value on the work they did and the money they earned. Once they have decided to buy something, have them personally pass the money to the cashier so they realise they don’t get to retain both the money and the item.

■ Tips for Elementary Aged Children

Show Opportunity Cost — That’s a fancy way of stating, “If you buy this video game today, you won’t be able to go to the movie with your friends tomorrow.” Our children should learn at this age that we struggle to earn money and that there are no endless finances.

Give Allowances based on Merit — A weekly allowance should never be expected. Rather, it should be earned. Consider paying a fixed amount for each work rather than a flat sum for a certain length of time. This means that they will be paid ₹100 for taking out the garbage, ₹200 for cleaning their room, ₹500 for cutting the grass, and so on. Putting a price on the work helps to put a value on the item.

Avoid Impulse Purchases — Kids this age often notice something and want it immediately. Set limits instead of succumbing to impulse purchases. Inform them that this item is not in your budget for that day and that if they want it, they must pay for it with their own money. Knowing they will not receive the thing for free often discourages them from purchasing it. Consider thinking about the item and returning later to buy it. Don’t be scared to say no. Not every journey needs to end with a reward or a purchased product.

Giving Back — Encourage them to contribute to their community by selecting a charity that they wish to help once they have a little money and understand the importance. Many kids often donate to animal shelters or food banks. Suggest contributing a percentage of their money or asking for monetary donations for their birthday instead of presents to benefit their chosen cause. Another approach to make funds is to sell unwanted stuff such as old toys or clothes, which also helps the parents organise the house.

■ Tips for Teenagers 

Open a Bank Account — Opening a bank account for your children takes money management to the next level, perhaps preparing them to handle a larger account when they become older. Some banks provide services in which the parents may immediately transfer allowance or earned money into their account, allowing kids to spend their own money

Set up College Savings — You may have already established an education savings plan. If not, there is no time like the present to begin. Is your kid planning a summer internship? Perfect! Talk to them about putting some money down for education. This will make them feel like they are contributing to their education and will give them ownership over it.

Teach them the Danger of Credit Cards — Kids get inundated with credit card offers as soon as they turn 18, especially if they are in college. Discuss early on why debt is a poor idea, but also how to begin developing their own credit in appropriate ways.

Get them on a Simple Budget — Convince kids to start using a basic budgeting software since they are likely glued to their phone anyhow. Now is the moment to assist your kid with his or her budget, no matter how tiny. Begin when they are still at home. Begin by showing them your finances, where your money comes from, how much is spent on taxes and housing, and how you spend the leftover funds each month.

Conclusion

Teaching your children about money will help them understand and respect it. This will eventually aid them when they begin earning after graduation. We have included practical guidance for parents in this special story to assist them convey solid financial knowledge to their children.