Let us all face the truth that at some point of time in life, our kids will no longer rely on us for any of their financial needs. There will be a day when they have to earn for themselves and secure their future financially.
As per various studies, teaching the kids about financial literacy has faded away over the last few years. The sad part being, even many schools fail to give children at least required financial lessons. It is now only the parents’ responsibility to provide the fundamentals of finance to their kids for their safe and secured future.
To help you, here are some key points that you may use to give financial lessons to your kids.
Making a pratice to save
The first and foremost thing to do is practice, the concept of spending a little, save a little. Whether it is about receiving a birthday gift from the family and friends or getting monthly allowance money, it is important to teach your kids to learn the habit of saving. No matter it is just a small or big portion, it is important that they create a savings goal in life like that of purchasing a bike or building up their college fund.
Avoiding peer pressure
Another important thing to teach your kids is to stop them from worrying about what the people will say about their financial condition. It is important that your kids avoid spending money just to be a part of the crowd. They must never compare themselves with their friends or people around. Give them some great examples to demonstrate the point.
Evaluating before spending
Chasing to own unwanted things in life can lead to poor financial habits in the future. Prepare them to become money mindful in every financial decision they take in life. Help them in understanding the fact that wanting something in life doesn’t always mean that they need to own it. One must make a decision after precisely evaluating and calculating what is more important at that very moment. For instance, saving for football sneakers is much more important than spending money in watching a movie with friends or having a party.
Developing interest in finance
There is a strong misconception amongst the kids that learning about finances is boring and worthless. As a parent, it is important that you change their mind set and rather make them believe that learning finance is fun and productive. You can start with setting aside some time in a week to discuss with your kids about a topic on personal finance. Take their help in checking your accounts, setting up your family budget, or ask about simple to start saving. Developing their interest in financial topics at a young age will help them live a sorted life throughout.
Teaching basic tax lessons
Yet another great way to teach them about finances is to teach them about basic tax lessons. Help them understand how the money is earned and why one needs to pay taxes. Further, explain to them the various ways in which they can save their taxes.
Encouraging kids to ask questions
The most important thing to do is to keep the conversation going. It is not about having a conversation once in a while rather it’s about maintaining it till they are smart enough to look after their expenses. Always encourage your children about asking questions related to finances, and get them involved with your household spending.
(Views expressed in this article are a personal opinion of Manoj Sharma, Head of Finance, Policybazaar.com.)