Educate Your Children On Finance, Make Them Understand The Value Of Money And Teach Them How To Save Money And Use Money Optimally.
Personal finance is something that nobody can ignore. The foundation of personal finance is the learning that parents give to their children right from childhood. It’s very crucial that a child understands value of cents and importance of it in his/her life. It is an obligation on parents’ part that they teach their children about basic finance and make them understand the value of money. Earning money is a hard job and using hard earned money wisely is also a tough task, parents need to make their children understand the same and teach them the basics.
Here are some financial values that you can inculcate in your children’s minds.
Give Them Live Examples, Share Your Experience
Children are always curious and try to learn whatever you make them learn. Their intellectual ability will not be at par wit yours. They don’t understand jargon, they are always familiar with live simulation and examples. They will start ignoring you if you advise them in financial language.
First of all, analyse yourself. If you are not concious about finance and spend money irrationally, your children will learn the same. Remember, you are the role model for your children in their initial mind-shaping years. Be rational and create an ideal example for your children. Whenever you sit to decide your monthly budget , involve your children in the process, let them add their opinion and if necessary, explain what you are doing and reasons behind the same.
You can also share your experience with them using very casual language. Sharing experience is not enough, also make them understand the consequence of the same. It’s a gradual process, your child will grasp things well and actively participate in the process.
As a parent, you need to have constant eyes on your children and especially on their spendings. I am not asking you to reduce their pocket money or reduce their spending budget. All you need to do is to have a track of how and where do they spend their money, do they spend money effectively? If their financial transaction are not good so impressive, you need to look into it and diagnose the problem.
Normally when youngsters get credit card, they tend to get crazy and spend money without worrying of future consequences of not being able to repay the dues and getting the credit amount converted into term loans. You, as a parent should inculcate this learnings into your children right when they get their first credit cards.
Be proactive, get involved in as many financial transactions of your children as possible. Make them read your credit card statements and explain them the details. Encourage your children to talk to banks for the best deals in credit cards.
Learn From Mistakes
We all are humans and bound to make mistakes. If your children make mistakes in the initial days of learnings, don’t criticise them, make them learn from their mistakes. Teenagers have fragile ego, you need to deal with them differently.
Make Them Read – Rich Dad Poor Dad
Children don’t think about future and tend to get carried away in current flows. As a parent, you have seen ups and downs of life, share your experiences with your children. Make them think about future consequences of every financial transactions and financial habits.
The best you can do here is make them read “Rich Dad Poor Dad”. Make them understand the importance of financial planning. If they have jobs, make sure they contribute to 401k plan and contribute to retirement plan.
Needs Vs. Wants
Food is need and Italian food in an Italian restaurant in a posh area is want/desire. Help your children understand the difference between needs and desires. Teach them the basic financial learning. Make them understand the significant gap between needs and wants or desires. You should not spend your hard-earned money for stuff which you don’t really need and you should not think twice before buying it if you really need. Help them understand the priorities in life. Medicines and education are the priorities and crucial needs while a car and an expensive cellphone are wants.
Your children will be the opinion leaders of tomorrow and it is very essential that they know the basics of finance and use the same intelligently.