Money Matters for Children

I believe that understanding the importance of finances and its future planning, is a lesson that parents should start early in life. Because when it comes to understanding your dreams and fulfilling them, there is no time like the present. However, there are many people known to me who still believe that that their kids are too young to learn about money. On the other hand many avoid this topic not because they don't want to talk to their teenage children about a serious aspect like money; but they find themselves unsure of what to tell them and how it can help them in that stage of their life. There are different ways to inculcate these values and it would depend whether the apple of your eye is a teenager or in pre-teens.

Money matters for the young

Parents don’t have to be finance whizzes to impart financial education. Idea is not here to create junior MBAs. Small little things go a long way. Kids can even learn from little things like turning off the lights in rooms they are not using. The lesson happens on the spot when children ask why the lights need to be turned off. A parent who responds by explaining that electricity costs money teaches the consequences of leaving lights on.

It’s not possible to have everything

As a parent you might want to give everything your child desires. Yet, in his interest it would be best if you do not always give in to his wants. Make your child understand that any product or service is bought with money, which is a limited resource. Making your child responsible for his/her spending is one of the best ways to teach money management.

Teenagers

The teenage years of our lives are usually the most crucial ones. This stage is the stepping stone for what we choose to do in our lives. This is the stage where start to form opinions, ideas, dreams, thoughts, goals we want to fulfill. Then how can we as parents ignore one of the most important lessons in life?  The money matters. With the changing times, it has become not only crucial to teach teenagers the importance of financial planning, but also a necessity. Understanding the world of finance and wealth will lead them to the path of attaining financial freedom. And this can be done in a very simple manner.

Financial responsibility and living on a budget

 Every teenager must be made financially responsible at a young age. Holding them accountable for the way they treat money not only creates respect for wealth but also teaches them how to manage the money they have. One way to create a sense of responsibility is to give them their pocket money for the month which they should spend judiciously. Another way to create a sense of responsibility which actually has come from the west; and I’m not sure whether my Indian friends would agree with me on that; is to make them earn their pocket money by doing chores around the house.

Teenagers do not believe in the idea of living on a budget. They come to the parents whenever they need money and parents give it to them, irrespective of the amount. Instead of handing it out to them, teach them to live on a budget.  I recall this particular incident of a relative who used to give her teenage daughter a certain amount of money every month. And if she ever wanted more, she would have to 'apply' for a 'loan' to her mother, who would then make her daughter pay it back in 'monthly installments'. This not only helped her understand how the banking system works, but also taught her the way to make the best of what she has.

Talk about the credit
At some point of their life, your teenage child will be introduced to credit cards. Instead of barring him forever from owning a credit card, explain to him how the credit system works and that he is accountable to every purchase he makes on the same.

Involve them in financial discussion
 Do involve children in the financial discussions and decisions and give due importance to their opinion and try to treat them as equals or adults. They will automatically be more willing to do what you say. Once you have introduced your child to personal finance take him with you when you go to meet your financial planner. In fact, you can also request your planner to spend 10 minutes with the child talking to him how to manage his allowance. Financial planning at every stage is crucial. It helps build a bridge that would allow you to move to your goals without any speed bumps. More on this would continue. Till then Stay Blessed!!