If you have kids, you may want to raise them in the best possible way. Your kids should know about all aspects of life, i.e. finances, relationships etc.
Out of all the aspects, the financial aspect is one of the significant aspects that we want our kids to excel in as it will help them make their lives smooth.
The financial introduction for kids
There is no specific age to learn about finances. There are activities available that will help you teach your kids about finances. You can introduce the financial concepts at any age and make them financially responsible.
Start with smaller tasks and make them aware of the basic financial concepts. It is always better to prepare them early than to start late. The kids can learn money management from you and can manage money in the form of their pocket money.
If you raise financially independent children, it has its own benefits. If your children are financially independent, they will get confidence once they start earning.
If you have huge bills to pay, you do not let your children know about it as you think it is not the right time. But start as early as possible as your children should know how to manage their money effectively.
Many parents are taking out agent loans that are available to your door and want their children never to borrow. This is difficult as if you are doing it, you cannot stop your children from doing it. Hence, if you want your children to be ethical, you should behave in the same manner.
Ways about money management
Lead by example
If you believe in good parenting, you must know that you cannot pretend in front of your children. Whatever you do, your children follow. If you want your children to follow a particular habit, you have to imbibe that habit in yourself first so that your children can observe and follow the same.
You are influential for your children; hence you should lead by example. Teaching financial independence to your kids means limiting your spending and showing them the importance of saving money.
Whenever you go grocery shopping, always use voucher codes and discount coupons. This will help you save money and teach your kids the significance of saving. You can instruct your kids that a penny saved today will be helpful tomorrow to spend.
Saving, lending and spending
When you start educating your children about finances, start by introducing basic concepts, i.e. savings, investing, spending, lending/borrowing etc. You can make them learn by an activity.
For example, take 3 jars and label them saving, spending and investing. Give them pocket money and tell them their targets. This way, they can learn and know how much to save, how much to spend and how much to invest.
Introduce children to the bank
You can get your kids account open in a bank and let them understand the whole procedure as banks allow a minor savings account.
Start it with a minimum balance and make them understand the banking process. This is a good way that will teach them about banking functions and also introduce the concept of bank savings.
Teach them expense tracking
Once your children are aware of all the concepts, make them learn the importance of tracking their expenses. Tracking your expenses is an essential aspect of financial management.
If you do not track your expenses, you can never reduce your expenses. It is essential to have awareness about your spending and to know your exact financial condition.
Teach your children the actual value of money. Do not just spend on whatever you need. Before spending, analyze your decision and see the benefit of spending money on the required thing is?
You should teach your kids how to spend money responsibly, and you should also follow the same strategy. Although, these days, there is guaranteed loan approval if you wish to borrow money to fulfil your expenses. But it is beneficial to stay away from the loan and make use of your resources effectively to stay happy.
Let them make mistakes
During the learning process, if your child is making a mistake, do not stop them from making mistakes but tell them where did they go wrong, and how can they rectify this mistake in future.
Also, teach them how not to make the same mistake again in future. They can learn practical, only when you give them some amount of money to handle on their own. You can start by giving them pocket money.
Once they learn to manage their pocket money, they have exposure to real-time handling money. This will make them smarter in terms of handling their finances.
Learn to compromise
Teach your child the importance of everything they buy from money. If they have to buy some things, they cannot buy them all. They have to compromise and prioritize their wants and buy them according to their priority.
There is no role of age in this concept. If they want chocolate, chips and marshmallows together, they cannot get it all together. Also, they have to weigh their decision whether it is worth buying and spending money.
Set aside for uncertainties
After educating them about spending, teach them the importance of savings and let them know the importance of saving for uncertainties. It is imperative in life to save with uncertainties as an emergency can happen at any time and with anybody.
In such situations, it is always better to have some money with you so that it does not give you stress and anxiety.
There is no guarantee that if you follow the above steps, your children will learn about money management in an effective way. You can invent and research more innovative and creative ways to make your child learn about money management.
Also, by being a good parent and leading by example, you can teach your child many things that they will not learn from anywhere else but from you.