The age-old notion of keeping children away from discussions about finances and household expenditures must be done away with in this growing digital age. Introducing your child to financial literacy at a young age is an active way to ensure they are not overwhelmed in the future while making decisions related to finances. Empowering your child with knowledge related to earning, saving, and spending money is a foolproof way to ensure they will grow up to be responsible with their own finances.
While finer nuances of saving and earning, like the stock market or bank fixed deposits can be explained at a more mature stage of their lives. The basics of finance can be taught while they are still young.
Here are a few tips on how to inculcate financial awareness in your child:
- Source Of Money
When your child is young they begin to understand your absence for a few hours as you leave your house to work. Explain to them why you work and how money is earned. This will help them understand the value of hard work as well as the concept of how money is earned.
2) Importance Of Budgeting
Children can be taught the basics of budgeting which includes important lessons like saving and spending through games. When you go to a market to buy groceries, explain to your child how you spend money on different items. They will understand the importance of not overspending on a single item and instead look for affordable options.
3) Show Them How You Spend Money
At a young age, children are extremely impressionable and have the tendency to copy the behaviour of the adults around them. Keeping this in mind, demonstrate your own spending habits. For example, while out at a grocery store give your child a list of things to get and let them decide. Once your child returns with the items, explain to them the concept of choosing items of affordable prices or of good quality.
4) Let Them Earn Money
When your child is young, provide them with the opportunity to earn money rather than just handing them pocket money. Begin a system of paying them for doing household chores, this will teach them the importance of hard work. As they get older allow them to take up part-time jobs while completing their education.
5) Basic Concepts Of Banking
Once your child is of an eligible age take them to the bank and open an account for them. Explain to them what credit cards and debit cards are and open a savings account for them. Hand over the responsibility of maintaining the finances in the account to them.