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If your ‘no money' excuse for denying a toy to your kid gets an ‘eureka ATM’ response, then it’s probably time to teach your child the importance of saving. Educating your child about the importance of money is not only helpful for him/her in the future but also gives you and your kid an activity to do together. In this era, where the life is so fast and it's hard to spare time for your loved ones, these activities can be a blessing in disguise. Here are a few things you can do to teach your kid the value of money.
Approaching the topic
A good start is job half done. So to get healthy participation from your kid regarding money management is to introduce it at the right time and with the right approach.
One way to introduce the topic of money for spending or saving, is to have a discussion with them when they ask you questions like – why can’t we buy that toy?, or what is expensive?, or are we rich or poor? Answering these questions by emphasising on values like saving, hard work, thoughtful spending and sharing will help you sow a seed of money management in your child's mind.
It is important to be careful when dealing with this topic as there might be a fine line between your kid understanding your intentions and considering you tight-fisted. So, instead of preaching, try and encourage them with discussions about managing money. Activities like budgeting their month, cost cutting ideas etc. will make them feel responsible and valued.
An easy way to teach your child about the importance of money is by teaching them to save it. Buy them a piggy bank and start a coin collecting hobby with them. You can tell them to fill in a specific amount in coins and notes to help buy something they want, or tell them to fill it till there is no space left in the piggy bank. Or, put a picture of the toy that your child has his/her heart set on and tell him/her to fill in a sum and that you will match it to help your child buy it. Every time they put in money in the piggy bank, remember to tell them that the more they save, the more their money will grow.
Jars for all
A predicament faced by many parents in the cashless times is that, as there are not enough notes and coins, it gets a bit difficult for your child to understand the transaction made, as visible money can show quantity depletion. In such situations, leading by example works. For instance, if you keep your money in a jar marked ‘saving’ as well and take the jar along for shopping. This makes the child feel more responsible and grown up while you inculcate a valuable lesson in your child.
Price compare shopping is another phrase for smart buying. By teaching this, rest assured, you would be bringing up a careful spender and not a reckless hoarder. This is an activity where you and your child compare the prices, quantity and quality of two products, one branded and the other a local, and decide on which one to buy. If the decision is difficult to make, then use the branded product for a week and the non-branded one the next week and then make a decision based on that.
Opening a saving account for your child also does its bit in explaining how important money is for leading a comfortable lifestyle. Encourage your child to make regular deposits by explaining them the concept of interest - how the banks pay you back for saving your money. Try opening a savings account in a bank that offers children's accounts with a no-fee and no-minimum-balance accounts. A child’s saving account is usually a joint account handled by the parents until the child is old enough and ready to do this on their own. When they are, teach them simple banking tasks like how and where to deposit cash and cheques that they receive as gifts, how to check their balance and calculate their money growth. To know more about children's savings account click here.
For grown up kids
As your child grows up, the method for educating your child about the importance of money, saving and spending carefully should also change. Including them while buying groceries, or buying gifts, taking them to discount shops etc helps. Asking them to save for that expensive gadget they have been bugging you endlessly about, may get the lesson in them sooner.
About Stock Market
By the time your child is a teenager and has handled the basics of money (saving, investing, spending, sharing), teaching them about the stock market might be a good idea, as the desire to trade in stocks would show them how money works and how people can make more. But stock market is complicated and needs time and patience to be invested. So, it would be a good idea to start slow, may be not with money. Have a discussion, quiz competitions with your kid as to who knows the stock market better. Once, your kid gets a grip about the market, encourage them to start investing slow and steady. Investing in stock works better if they work as a team, with you or siblings or like-minded friends where they can share ideas and debate on their next move. Teaching your kid about stocks will broaden their horizons and teach them the value of patience and adaptability.
Besides educating them about the choice of saving, spending and investing money, also teach them about charity. It’s a very virtuous attribute which, if taught early in life, makes your child a compassionate human being. You can do this by setting up a piggy bank with ‘sharing’ written on it and encourage your child to regularly put in a certain amount.
It is important to teach your children the importance of money at an early age so that they grow up to be mature adults making wise decisions relating to money matters in their prospective life.
As the saying goes, if you save money today, it will save you tomorrow!
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