By Ankit Gera
World Health Day 2022: It has been over two years since COVID-19 struck the world, and its impact has been overwhelming. Besides all the uncertainty, it made us realise the importance of maintaining good physical and mental health. But this World Health Day, let’s talk about one of the least talked about aspects of health, i.e., financial health. As parents, you always want the best for your kids, but that doesn’t necessarily mean you just want to buy them the latest gadgets they desire or get involved with their studies. It most likely means that you want them to be safe and secure and build a strong foundation for them to do well in life. This can only be done when you indulge in making your children money-smart.
Did you know that money habits are set by the time kids turn seven? Yes, you read that right. Young minds are malleable at these young ages, and it’s smart to start early if you want to inculcate good habits, whether to be involved in some sport or save money.
In the age of digitisation, kids are already aware of terms like credit cards, debit cards, or online payment. However, with little to zero understanding of what’s actually happening, they can’t experience financial responsibility. Here’s how you can give your kids the gift of financial literacy from an early age:
Lead by example
You cannot just tell the child to buy one thing while splurging at your favourite stores. Practice what you preach because you have a great deal of influence on them, whether you realise it or not. They watch your every move, listen to what you say, and pick up things they see you doing.
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When your child asks questions about paying bills or why go to work, have an open-ended discussion about the importance of such things. Talk to them about how you make money, why it is important to save, and how to make wise decisions about buying something. You can also set up three jars – one for spending, one for saving, and one for donating. Not only will this teach them the value of giving back, but it will also make them manage money efficiently. The best thing you can do is be a good role model for them.
Create opportunities for them to make their own money
Kids need to have their own money to reals the importance of spending it. You can consider giving them specific tasks to earn their allowance. Besides their regular contributions as a part of the family, you can assign them harder or more complex tasks and decide on an allowance, just like pocket money. Children must be taught that money is earned after a job is completed. Rather than buying them a new toy/piece of clothing, encourage them to make money through chores to get it themselves.
Involve your children in budgeting
Make sure to involve your kids in your monthly budgeting. While you might think that they wouldn’t understand most of it, you will be surprised to see how it will enable them to reduce their expenses. From saving on electricity by switching off fans/computers to learning not to splurge, kids will be equipped to make big investments in the future.
Instill a habit of saving in them
Your children look at you purchasing things, including things for them. Therefore, it’s crucial to teach them that it is not just for spending. They should be saving it too. You can ask them to set goals for themselves, like as simple as buying a cycle and encourage them to save for the same. This will not only assist them in setting short-term goals, but it will also help them manage money judiciously lifelong.
Teach them the difference between need and want
As redundant as it may sound, making your kids understand the difference between what they need and what they want is extremely important. You can do this by making a list of choices and encouraging them to distinguish between the items and why they need or want them. Gradually, they will understand the categorization and its necessity.
Money management can be one of the most important life skills you can impart to your children. As parents, you, obviously, aspire for your kids to live a secure life, and you can start by raising money-smart kids so that they can grow into financially independent adults.
(The author is Co-Founder at Junio. Views expressed above are those of the author and not necessarily of financialexpress.com)