Although money has always been a difficult topic, giving your child a solid education ay this stage of life will help them succeed in the future and will benefit them greatly as adults. Although it may need additional effort and preparation, your children will be grateful that you helped them learn the fundamentals and significance of savings and instilled this important lifelong habit.
The first step
Before you can explain to your children why saving money is important, you must first educate them comprehend the value of money, according to financial planners.
“Start by going over the fundamentals of arithmetic with them. You can use games or counting to help them comprehend the notion of money and its uses. Even the basic board games can be useful tools for younger children. They start to grasp the concept of money when they trade tokens for in-game items,” says Abhay Sharma, a chartered accountant based in Gurgaon.
Setting simple rules
Growing up, many of us received allowances, and teaching children about money is still a common practice.
“While some parents like to attach their child’s allowance to duty completion as a way of showing them how occupations function, others just give their child a weekly or monthly allowance. Some people utilize allowances as a reward for saving a specific amount of money or getting high grades. Choose the format and amount of allowances you want to offer. Make the rules obvious to your child, then follow them,” says Hans Raj, another chartered accountant.
Start simple
Start with the age-old kid-friendly savings strategy known as the piggy bank. Of course, there are more options available these days besides the traditional pigs. They have a wide variety of forms and personalities.
“Allow your child to select their favorite and demonstrate how to insert coins or notes into it. Describe how money entered into the bank ought to stay there. You may even have a conversation with your child to find out if they have any specific toys or purchases in mind, and then frame your savings goal around that,” says Sharma.
Teaching right
“But make sure your children know the difference between necessities like food, clothing, and shelter, and wants like the newest video game. Since they are still young, the intention is not to rob them of their desires, but rather to assist them in differentiating between necessities and wants,” he adds.
The right instance
Up until a certain age, kids observe what the adults in their lives do and typically want to emulate their parents. “They will learn that these are wise decisions and witness the advantages materialise in front of them if they observe you managing your money sensibly, setting money aside for large purchases rather than charging credit cards, and saving up,” says Raj.
