Money as a creation of man is the most sought after commodity in the scenario presently, and financial lessons are those we learn every day in a new way. It is essential for living, business or getting services or buying products. Hence good management is required to keep our head above water.
Children also need to know about money. They should not be ignorant of its importance and use. As soon as your child becomes aware of the use of money start teaching him basic money handling techniques. The financial lessons at the tender age will help him/her to become good money managers later in their life.
- Allowance/Pocket Money: The first tryst with using money is to provide you child with a monthly/weekly allowance. Reward him/her with a raise if the buying behavior is good. The money should be spent without parental monitoring. This will instill confidence and drive your child towards financial independence.
- Saving: One of the traditional ways to teach saving is to buy a piggy bank. It is an old idea but instills the saving habit. Motivate your child to save some part of allowance. Show him/her how the saving can help in times of need. This will go a long way in instilling financial discipline.
- Opening a bank account: After a stint with allowance and saving, open a minor bank account in the bank. Teach him how interest is paid on the money kept in the account. Teach him to withdraw money and also to save for some long term goals like buying an expensive book or game. Teach him to deposit the savings, and show him how money will earn compound interest. The practice will help in knowing how a bank works and he/she will become aware about the various financial terms.
- Budgeting: After opening a bank account teach your child how to manage money by budgeting. Take him out for shopping in the market and let him buy with his allowance. Show him/her how you set aside money for grocery, bills and savings. Suggest him to save a percentage of allowance as a saving and make deposits in the bank after the saving is say $100.
- Charity: Also motivate to spend some money on charity. It may be 50 pence, but it will teach him/her how to use money empathically.
These basic things taught to children in early age will make them a good human being as they will be financially disciplined and will use money prudently later in their life. It has been observed in a recent survey that children who are taught money management at an early age rarely face money problems in their lives. So, start today to make your child’s future bright.
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