In today's world, understanding the value of money at an early stage is important. Kids who are not well versed with the principle of savings and the importance of money tend to be over spenders in later life. Teaching your kids basic ‘money values’ will ready them for the financial challenges that they will face as adults.
As parents, you are setting an example for your children. Kids are known to imitate the actions of their parents. So here are four things you can teach your kids that will help them understand and manage their money:
Understanding the value of money
You would not expect your kids to understand the difference between a 1 rupee coin and a 100 rupee note unless you teach them their value, or what these denominations can purchase. A good way to start can be to buy them toys each worth 10 rupees or less and 100 rupees or more. Chances are, the 10-rupee toys will bring the same happiness as the 100-rupee toys. However, they could be more drawn to the 100-rupee toys because they would be of a better quality. Discussing this will help them understand the value of money.
Making saving fun
Kids will not understand the importance of saving on their own. However, you can make them understand the value of having a saving account by making savings a fun activity. A good way to start would be to buy them their own piggy bank, explaining that with whatever they put into it, they can buy their favourite toys.
Reward your kids’ saving and money-management habits
This can go a long way in motivating them to save more. When your kids try to help you out in the kitchen, you may reward them by treating them to cookies. Similarly, you can add to their piggy bank every time they put in something. This will motivate them to save more and help them reach their goals faster.
Analysing your own savings/spending habits and changing them if necessary
As a parent you should not spend excessively around you kids if you are trying to instil good financial habits in them. A good practice is to take them shopping with you and demonstrate to them how to balance quality and price.
Our nation's economy depends on the financial habits of the younger generation. It is imperative that children learn the importance of money and finances at an early age to be well prepared for the future. Teaching children good money-management skills will help them to make sound financial decisions.
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