By Anup Bansal

Becoming a parent isn’t an easy decision in today’s world. It means providing the best upbringing and ensuring your child can handle whatever the world throws at them. But providing the best for your child isn’t as simple anymore.

Thanks to increasing inflationary pressure and lifestyle costs, raising children and fulfilling their requirements from schooling to extracurriculars have become financially challenging.  

While you are trying to save and invest in securing your child’s future, it is equally important that growing up, your child values money and the effort it takes to earn and grow it. It is said that an investment in knowledge pays the best interest. 

So this Children’s Day, take the initiative to teach your child valuable lessons on being financially responsible and empower them with skills that will serve them well as adults. 

Show them how being good at managing money is a superpower

We teach kids how to read, write, speak, etc., from a young age because they are pretty much essential basics. 

Money management should be treated similarly as an essential. Once your child is old enough to understand the basics related to money, start teaching what purpose money serves and how it is earned, saved, used, and invested. 

It can be daunting to teach a child how money works. However, most children learn the concept of doing something and earning a reward for it. You can apply the same to things like pocket money. Your children should learn early that there is no such thing as money for free. They can earn their pocket money by performing simple but valuable household tasks. 

Your kids can also be taught how all money should serve a purpose. If they want a specific toy or gadget, show them how to plan, budget and save for it. Actions like these will encourage your child to develop a planning mentality. As you well know, thinking ahead and planning effectively is an essential prerequisite for becoming a successful investor later in life. 

Don’t wait too long to show your child how you invest 

Practical knowledge is always superior to theoretical knowledge, and the same should be implemented to teach your child how to invest. Talk to your child about his/her goals, even if the answer is “I want to be an astronaut, and reach Mars” at the age of 6. Teach your child what it takes to reach there – in an age-relevant manner, of course! 

Take them through how you are investing for their goals. It may also make sense to show them where the money is invested and the logic you used to make your choices. A precocious child is likely to find the idea of inflation and how to stay ahead of it interesting if you show how his or her goals are affected by it.

Show them how different asset classes work and what problems they solve for you. You can show them how a SIP makes it easier for you to invest from your salary. Opening a minor account and investing in it can be a practical lesson for your child, as well.

Share your investment journey with your child

You are the role model for your child and may have seen your child imitate you at times. How you act often has a direct impression on your child. Thus, if your goal is to help your child make better financial decisions growing up, you may want to lead by example. 

For this, what can be better than passing the baton of your learnings, whether from success or failure to your child? Tell your child about the time you wish you started saving money early, why some investment decisions didn’t work out, or the times they did and have fulfilled some goal.

Your own lessons can show not just the value of making smart investments and financial planning decisions. They can also help your child learn the importance of how the right decisions can influence future outcomes. It would also be a good idea to explain how simple chance can play a key role in life and personal finance.

Help your child learn to invest in the real world

We mentioned earlier about showing your child how to invest from a broader perspective. We also mentioned minor accounts. Combining the two, you can help your child make actual investment decisions.

For example, you can show your child how Rs 1000 can grow differently in different types of mutual funds and also what goals they can achieve with each. Let your child make the decision. Help them do the necessary research and make it a project. 

This will help them understand investing and build skills that translate well into academics. Academia can often be distanced from real-world applications, but working on real-world problems can help your child understand the importance of what is taught in school, whether in math, economics, or even history!

Here’s the takeaway 

While providing for your children can be rewarding, empowering them with the necessary skills to provide for themselves can be far more so. 

It is within your power to teach your child how to be responsible towards money and pay attention to investing and the dreams it can fulfill. The earlier you start, the better you can help your child develop an effective financial mindset and grow as a financially literate and independent individual. 

(The author is Chief Business Officer, Scripbox. Views expressed above are those of the author and not necessarily of financialexpress.com)