It’s said that one of the greatest gifts you can give your child is to prepare them to be a responsible adult with money. As parents it’s your responsibility towards your children to help them develop a frame of mind that understands the value of money. When your child starts to believe that money can buy them anything and everything, they don’t understand where to stop or their limits. It’s in the interest of parents and their child alike to instill a sense of financial responsibility from early childhood through their teen years.
Let’s take a look at some tips and tricks to prepare your child to manage his/her finances:
1. Teach them how to manage their limited budget
Start teaching your kids about money early in life so that it becomes a habit. If they get easy money they will never value it. Fix their allowances. Make them earn their allowance rather than just providing it for free. Once you’ve given them their allowance, let them buy stuff they want. They will soon understand that being a spendthrift is not the right attitude as they won’t be able to afford anything new until their next allowance. This is how they will learn how to manage with their limited allowance.
2. There is no bank with unlimited supply of money
It’s important for kids to understand that money is not an inexhaustible, limitless resource. Let them manage their finances but let them learn to avoid unnecessary expenses. Ask them to help you with the household budget. Take them to the store with you, let them watch you pay the bill and that’s when they will understand the real cost of things and what they can buy and what they cannot within their budget.
3. Practise how to stay within a budget
Once you’ve given your child allowance, help them prioritize their expenses. Help your kids to make a list of the important things they want and urge them to keep a separate amount for unexpected spendings. The best way is to allot a daily budget and to assign dates to all the expenses and this is where parents need to guide their kids. Help your children to create a budget worksheet in order to track the flow of money.
4. Set a good example as parents
Children mimic their parents even while managing finances. So, if you’re a person who uses a credit card often, your kid will follow the same pattern; and if you are someone who saves a little amount every time you buy something, your kid will value money the same way. One way is to include your kid in your financial decisions like buying something online and how you consider good deals before spending your hard-earned money. Don’t hesitate to share your financial mistakes and your learnings. Giving an example is easy, but setting one is difficult.
5. Inculcate the habit to save
Learning to save money is a vital skill. Talking to your teens about saving money may seem like a daunting task, but it shouldn’t stop you from encouraging your kid to save little amount for their short-term goals such as buying a dress, football or cricket bat. Teaching your kids long-term saving can help them achieve long term goals, such as buying a car, house, and so on in future.
Being a parent is a full-time job, and this job comes with a lot of responsibilities. Inculcating good habits like understanding the value of money in your children is only going to make things easier for them in the future. So, chart out a plan, get set on the task, and make your kids responsible adults who know the value of money.