It is necessary to give kids money lessons at an early age so that they don't start believing money grows on trees. Also, learning to manage money at an early age will make a child financially disciplined and save for their future.
Christmas – the time for gifts – is here again. Christmas is a special day especially for kids as they associate this occasion with gifts and most believe that gifts are presented by Santa Claus himself. Hence, on this occasion parents give their kids a gift. If you are also planning to give your child a gift on Christmas Day, take it a level up and give them something that will help them to be financially disciplined and financially independent. It is necessary to give kids money lessons at an early age so that they don’t start believing money grows on trees. Also, learning to manage money at an early age will make a child financially disciplined and save for their future.
Here are some financial gift options and money lessons that you can give to your kids on this Christmas Day;
- Importance of Savings: Kids need to be told about the importance of savings. They need to understand that it’s not about how much money one makes, but it’s how one saves it. The habit of saving and investing leads to a financially successful future. The more one saves, the more one will be able to accumulate and more wealthy he/she will become. You can start by telling them to save small amounts from their pocket money, and at the end of the month, the amount they save, you can put in the same money additionally as a reward. This will push them to save more and inculcate the habit of saving in them.
- Children’s Bank Account: Get them their own savings bank account. There are many parents who do not want their kids to wait until the child turns 18 years of age to open their own savings bank account. Various banks, both public and private sector banks, offer savings accounts for kids, which come with different features. For instance, ICICI Bank offers Young Stars Account for kids, Kids Advantage Account is offered by HDFC Bank and PehlaKadam and PehliUdaan by the State Bank of India (SBI). Putting money in a bank savings account is better than saving the money in a piggy bank because, at the same time, the money also earns interest instead of sitting idle.
- Smart Spending: Let your kids know that after they save their money, how should they go about spending them. They need to know how they can make the most of their money by spending their money in a way that adds more value to their life. As a start, you can give them small tasks like buying their pens and pencils in a certain given amount. Experts suggest parents can also take their kids with them while doing their monthly or weekly shopping, and teach them how to buy household items and grocery by making most of the money. This way they will learn how to spend money smartly.
- Involve your Kids: While making your family budget, involve your kids. This will help them understand how much is needed every month for household and other expenses, and how much is needed to be saved for the financial future of the family. This way they will learn the art of budget making and also cutting the coat according to their cloth. Kids learn whatever is taught to them or whatever they see. They unconsciously pick up the gestures of their parents and the same with their financial traits too.
- Invest for your Kids: This Christmas Day, instead of buying your kids some expensive gifts, invest for their future. Be it for their higher education or marriage, start your investments. Higher education both abroad and in the country has become very expensive today. Hence, experts suggest parents need to start investing in a proper investment instrument to meet the expenses at the right time. To start with, for a girl child you can look at schemes like the Sukanya Samriddhi Yojana scheme, which is a government scheme and a small amount can be deposited to meet future expenses for the child. If your goals are more than 10 years away, you can invest in instruments like mutual funds, Ulips, and the stock market. For long-term goals, experts suggest, equity mutual funds work great as an investment vehicle, where you can invest through monthly SIPs.