Are you someone who remembers using piggy banks to save money during your childhood? If so, you may also recall the feeling of joy when you managed to save a large amount of money unexpectedly, or your dada or dadi gave you some money on your Birthday? the joy of putting that money in the piggy bank was like none other. For most of us, the piggy bank was our first introduction to the concept of savings. However, today's world is vastly different, and children have more exposure to finances and money. Teens, in particular, are among the most sought-after consumers for various products such as clothing, entertainment, education, consumables, gadgets, games, and more. Thus, it is a significant challenge to instill basic personal finance principles and good financial habits in them.
As parents who also happen to be investors and financial planning experts, we can play a crucial role in shaping our children's financial management habits and understanding during their adolescent and character-building years. Our broad objectives as parents should be to give them an understanding of the importance of money, make them comfortable and confident in handling money, make them capable of managing money safely, make them financially responsible, and develop enthusiasm for learning more and saving for the future.
Here are some ideas on how we can achieve our objectives on money matters with our growing children in a more modern and engaging way.
Pocket money is one way we can teach our children about financial responsibility. We can give them a set amount of money regularly, along with the responsibility of paying for something they want, which allows them to develop good money management habits. With pocket money, we can instill the principles of budgeting, savings, planning for big expenses, being disciplined and responsible, and so on. Therefore, the next time you give pocket money, consider what else you can teach along with it.
Understanding the value of money is also essential during the growing years. Parents today tend to pamper their children, and fulfilling most of their demands may lead to the child undervaluing money and the effort needed to earn it. We can seek the participation of our children while planning for household expenses or monthly budgets for the family. We can also encourage them to do some household activities or tasks to earn some extra money besides the pocket money. This is something that's regularly done in western countries. Additionally, you can show your children how much a regular car washer earns by asking them to wash your car properly once a week. With digital skills, we can also reward them for completing courses or doing some digital activities on our behalf.
Spending money is another area where we can teach our children about financial responsibility. Today, children have access to an unlimited amount of spending opportunities, from entertainment to dining out, travel, electronics, and more. We must monitor their spending and ask them to limit their expenditure to a set budget. As parents, we should also learn to say 'No' to unreasonable demands that children place on us. By demonstrating discipline in our own spending habits, we can help our children learn a lot more than merely preaching to them.
Investing Money Introducing children to investment at an early age can provide them with invaluable real-life experience. Parents should share their investment strategies and discussions with financial advisors and mutual fund distributors with their children. Opening an online mutual fund investment account for children, along with a bank account, and encouraging them to invest regularly with SIPs can also help them learn about saving and investment decisions. Parents should allow children to make investment choices and present and discuss their performance with them from time to time. Such real-time experience can shape children's attitudes towards money.
Ensuring Online Safety: The digital world has many benefits, but it also poses various risks, including online frauds and scams. Parents must educate their children about different types and ways of fraud, cheating, and scams that occur online. Children also need to learn about digital security, not just with money but also with privacy and other risky matters. With the growing trend of online gaming addiction, parents should guide their children about responsible use of digital media and being cautious online.
Conclusion: Parents aim to provide their children with essential skills, knowledge, and behavior to succeed in life. Teaching children the virtues of contentment, happiness, sharing, caring, self-reliance, discipline, and delayed gratification is crucial beyond just money management skills. Parents should focus on instilling these values in their children, along with teaching them how to manage their limited resources smartly. With little effort and planning, children will appreciate and benefit from these lessons in their growing years.
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