Parents can teach their children about money management from a young age in many different ways, which could be fun yet essential for inculcating healthy financial habits in them. For example, the lessons could be imparted during a fun-filled trip to the market, in a formal setting like a classroom, or at home.
Since most schools in India impart little to no training on how to handle money , the responsibility of teaching children the fundamentals often falls on the parents.
The easiest way to do that is by making money a part of the child’s everyday experiences. Here are some ways to develop the right habits.
Make It Fun
Playing games related to money could help familiarise children with the concept. For instance, one could devise a game of coins where one can match coins of the same value and make piles. Taking them for grocery shopping and involving them in making purchases can help them assign a value to the coins they play with at home.
Let Them Handle It
Though children imbibe a lot from their surroundings, the first-hand experience can benefit them a lot. The best way to do that is to let them make the run to the local grocer for immediate family needs. That will hone their basic calculation skills.
Once they are past the basic phase, a monthly allowance can help them make money-related decisions regarding their spending pattern. But this can happen only if parents set certain ground rules.
E-Pocket Money Apps Could Be Helpful
Apps such as Muvin and FamPay work on the concept of pocket money. They teach savings habits among youngsters while allowing parents to oversee their spending.
After the wallet is installed, the parent can directly transfer the pocket money. Each wallet has a tie-up with a payments bank or traditional bank.
These apps can help children independently learn how to handle expenses, understand the value of money, and learn goal-based saving.
Make Them Worldly Wise
Helping children earn extra money through small jobs, should they want to spend more than their allowance, would also prove helpful.
Build Savings Habit
When they reach teens or youth, parents should introduce them to basic financial ideas. For instance, to help them understand goal-based savings, ensure the pocket money pays for their discretionary spending, like buying a new phone. It will inspire them to identify what is important and help them save money for bigger expenses.
Make Them Assess Themselves
Children should learn to assess their own spending habits and patterns to ensure they don’t repeat any mistakes they may have committed. Thus, by giving pocket money, parents can inculcate healthy financial habits among children.
Introduce Organised Finance
It’s not enough to just open a savings bank account in your child’s name. Encourage them to operate it on their own once they are teenagers. Teach them to deposit their pocket money in it and withdraw it when in need.
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