6 Simple Ways Parents Can Teach Money Lessons to Their Kids
Did you know children learn money-saving habits by the age of seven? However, many parents are not comfortable or are very reluctant to talk about money with their kids. But it is a parent’s responsibility to teach money lessons and how to manage money to their kids
If you are a parent, ignoring money lessons may not be the right thing to do for your child. We know it is difficult to teach these lessons to our children. Hence, we are sharing some ways that may make you feel comfortable while discussing money issues with your kids.
Help them distinguish between needs and wants
It is common for kids to demand everything that they see on the shelves of a supermarket. But it won’t be wise to give everything to your kids even if you can afford it. Teach your kids the difference between ‘needs and wants’ with age-appropriate examples.
For instance, if your child is begging you to buy drums and telling you how they really need them. You can tell them about the condition of a keyboard that they really needed a few months back.
Let them earn their money
Giving your kids the opportunity to earn their money may make them aware of the importance of money and hard work. You can give them a nominal amount of money when they complete the household chores. This will allow them to save money as they earn.
Instill saving habit
Helping your child inculcate a savings habit is an essential life skill. But asking your children to save money without explaining the reason behind it may be a very futile exercise.
You can define a savings goal to keep your children motivated enough to save money.If your kids know what they want to save for, you can help them break down their target amount into smaller amounts and give them a certain amount of money every week or month to save towards their goal.
Make them aware of the different saving options
As your children save money, they will need a place to save that money. You can get piggy banks for your younger kids. Transparent piggy banks will give them a sense of accomplishment when they see their bank filling up with coins and notes.
Opening a bank account may be the best option for your older children. It will help them become familiar with banking and the different saving and investment options.
Tracking their spending
To be a better saver, one needs to be aware of where they are spending their money. Encourage your kids to track their spending and keep a note of it in a notebook or a money manager app.
Give them interest on savings
You may offer specific interest rates on your kid’s savings to make them excited about saving. If your kid is old enough, let them calculate the monthly interest they will earn on their current month’s savings. Paying a nominal monthly interest on their savings may help them save more.
Knowing how to manage money is an essential life skill. And as formal education ignores financial literacy, it is up to the parents to teach good money lessons to their kids.
In this article, we have seen six ways parents can help their kids inculcate good financial habits.
This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.