Money Lessons from Parent to Child

1. Money Lessons from Parent to Child It is natural for every parent to want to provide an easy and the best life for their child by securing their present and future needs. For this, apart from providing for their immediate requirements and building investments for their future, forming a foundation of financial knowledge is necessary. Children must gain practical knowledge of money to live a good and secure life. This learning comes through observing parents’ behaviour in terms of how they manage their wealth, as well as the habits that they strive to promote in the household. As per the 11th Annual Parents, Kids & Money Survey held by T. Rowe Price, one major drawback was that almost half of the parents are reluctant or miss opportunities to share financial knowledge with their kids. On the other hand, half of the surveyed children were eager to learn about money and how to handle it and wished their parents had taught them more about it. Despite being burdened with work and other responsibilities, parents can take up easy and fool proof ways to instil good financial values in their children. A brilliant way to do this is via entertainment. There are many movies around this theme, and we are here with some suggestions! Take a look at the list of the Top 10 Money-Movies to Binge Watch here. Apart from this, take the routine approach. Values of wealth management build over time. To make sure your children are on the right track, follow these ideas every day: Give them a feel of how transactions take place Start giving financial lessons to kids even before they turn seven. This is because, as per research, money habits are instilled within them by then. To begin with, explain to them the difference between coins and cash and what they are used for. Take them to stores and show them how transactions take place. At a later stage, you may also teach them how a debit or credit card works, thereby introducing them to the idea of loans and timely

2. repayments. Lastly, give them a copy of the receipts to analyse the payments for a better understanding. Explain to them the magic of savings The first thing kids will associate with money is that they can obtain things by exchanging them for the desired object, making it almost a magical tool to get what they want. Therefore, it is essential to give them an idea of the other aspect as well, namely savings. Learning to save money is not just a necessary habit but will also improve their sense of financial planning. Kickstart this habit by giving them a savings box or a piggy bank where they can store their cash and coins. Kids can be further encouraged by setting short-term goals for money-saving, such as collecting funds for a toy they really want. This plants the idea of self-sufficiency that they can achieve by buying things from their savings. Teach them how to earn money Giving kids their own allowance is essential for behavioural growth and maturity when it comes to building decisiveness and handling finances later on. However, make sure that they understand the effort that goes behind earning money. Before giving them an allowance, make them earn it by performing a task. It could be simply cleaning their room, finishing their homework on time, or any such activity. Kids tend to treat money obtained from hard work with more value and are more careful about what they spend it on. Explain the benefits of smart spending Break the amount you give to your kids into four parts and pay them every week. This is a genius and foolproof way to instil smart spending habits within your kids because they are bound to always be on a budget. If they want something that costs way more than their allowance, they can plan and spend accordingly. This will give them a practical experience of budgeting, which they can easily incorporate into their life once they start earning. It also gives them a sense of freedom and a responsibility to be mindful while spending. Teach them how to invest and expand their wealth Investing can be a complex concept for children, so you may wait till they attain a basic understanding of money matters. Once they are ready, start by taking them along when visiting a bank. Explain how the banking system works in easy terms, the benefits of depositing money in terms of returns, and how certain investments work. This will familiarise them with the concept of banking, making it easier for them to make the right financial choices once they are old enough. As your children grow older, give them an introduction to the various investing options. To get the latest updates right to your phone, you can download the TejiMandi App.