Parents raise their kids with the hope that the kids grow up to be happy, successful and prosperous. As parents, it is also essential to teach your children about finances. They need to know the basic disciplines of managing money.
While teaching your kids about finances, follow these steps:-
1. Pocket money
Give them a fixed amount each month, nothing more and nothing less. They have to adjust their needs with the money they are given for the month. If they run of money, they have to wait till the next month. This teaches them that money is limited and you need to spend it carefully. India’s First Free Online Financial Advisory, Moneymindz
2. Don’t give money for running errands or doing favours
When they help you with the household chores, they are doing their duties. Since they live in the same house as you do, it becomes their duty to help in the household chores. Giving them money to do their duty means bribing them. You are essentially bribing them and teaching them that being corrupt is fine. Let them help with household chores without receiving money for doing so.
3. Teach them where the money comes from
They may have seen you do online shopping, use ATM, etc. But they don’t know where the money comes from. Don’t let them believe money comes from the ATM. Tell them what you do for a living. You must be doing something to earn income, tell them how and where you earn that income from. They should get an idea that money neither grows on trees nor jumps out of an ATM. India’s First Free On call Financial Advisory, Moneymindz
4. Basic budgeting
When you give your little ones monthly allowances, teach them how to budget. Make them write the money they get each month (as income), their expenses (like chocolates, ice cream, etc) and savings. Encourage them to save more. Give them a piggy bank or a tiny jar to store what they save. This is budgeting, at a fundamental level. Add investments, insurance, financial goals and time frame to it once the kid(s) get familiar with it. On the side note, the same applies to you. Start a budget or improve your budget.
5. Teach them the difference between “needs” and “wants”
You have to teach them this difference before giving them money or telling them anything about finances. A need is a basic necessity like food, air, water, shelter, clothing and medicine while wants are just desires. Mahatma Gandhiji once said, “The earth has enough to fulfil men need and not mans greed”. Don’t teach your kids to be greedy and ensure they don’t learn to be greedy. Smart Financial Advisor, Kuber Mindz
6. Delay gratification vs. Instant gratificati9on
We live in a world of Instant gratification and that why we are never satisfied and happy. We lack patience and want everything to happen this very instant. We don’t realize that Rome wasn’t built in a day. Teach your kid to delay gratification. Practice it yourself. Teach your kid to be patient that will keep him/her happy in the long run. Don’t let the lives of the future generations be dominated by greed and all those advertisements everywhere.
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