Given how important financial skills are to navigating life, it's surprising that our schools don't teach children about money. As a parent, however, you can teach your child important financial lessons—and you should. Unmana Dutta lists simple ways of educating your little ones about the concept of money.
As parents, we consider talking to our children about certain issues mandatory. For instance, the importance of respect and love for elders, the idea of God and religion, differentiating between good and bad touch, the role of physical health and emotional well-being. However, as we get busy imparting life lessons, an oft ignored and forgotten aspect happens to be the importance and role of money and budgeting.
As a psychological consultant, most parents tell me that they want to provide the best financial environment to their children despite the hardships involved in earning that amount of money. The point parents often miss in doing so is that if the child is able to see and understand the amount of hard work you are putting into getting that money, he/she is likely to value it more.
Most often many children are seen throwing a tantrum in public over something their parents did not buy for them. Most parents agree that it can get embarrassing for them where they have to manage the behaviour of the child and also make the child understand the money involved.
So, here are some of the easiest tasks that parents can do with their children in order to help children understand the importance of budget and money matters:
Do not pay for home chores
Not every work that your child does for you or anyone has to be rewarded in terms of money. A normal word of appreciation and thank you must suffice and not everything must be rewarded with cash. This will help them understand that they are supposed to do these works because they are a part of a family and it is their responsibility to help everyone in the household chores. Only in cases of special work that they do like cleaning the garden with the gardener, helping in washing the car, etc. could they be rewarded with small amounts of money.
Give money to them to manage their own budget
Just when the family goes out for a tour or trip, give a fixed and equal amount of money to each of your children and tell him/her that anything he/she wishes to buy or spend has to be necessarily from that amount of money. You will see your child calculate, measure, request and bargain for the product he/she wishes to buy. You will also see them leaving one product and moving to another thinking that they might get a better one. It is at this moment that your child will understand that you as parents also have a fixed amount of money and cannot spend it all.
Set the right amount and time for pocket money
The pocket money that parents give to their children should be given in a fixed amount at a fixed time interval, and not on any random day. If you have started giving pocket money to your child at the beginning of each month, make sure that you give it only at that time. This helps them understand that money comes with patience and time, and it also helps them learn to manage their expenses throughout the month. The amount of money could be fixed on each birthday and then increased, depending on the requirements of the child. Excessive amounts of money is anyway not suggested for children as pocket money.
Involve them in family budget discussions
Talking to your child about the household budget and its management helps your child to grow, while understanding the real income of your family. It also helps in understanding where, why and how much you are investing. Moreover, it will also help him realise the daily expenses that are needed to manage a house. So, be wise and share some ideas about your home budget when your child reaches middle school.
Teach the importance of savings
Most parents give a piggy bank to a child to start saving money out of the pocket money that they give to them. However, many children do not know why they are saving up to and what purpose it will serve. Teach them the ways that they can spend their saved money. One of them is to teach them that they can use the money to do some social work, gift one’s friends and family for special occasions, etc.
Give them the choice to make decisions
If your child wishes to buy a product and throws a tantrum in a public place, give him/her a choice. The choice should be to either get the products that they are demanding or that they will not be able to buy any more product because they already bought one. This will help the child to know that all products come with a price tag, and not everything that they like is easily available to them always.
Show them real money
In today’s time of online transactions, people often do all transactions mostly through their online wallets or cards, and in this process children miss out on the cash flow process. They feel that the card of their parents is an easy way which could help them to attain anything that they wish to buy. So, sometimes, it is important for your child to see you doing transactions in cash, where they will understand the role of change-taking from the shopkeepers and managing your budget in the fixed amount of money available at the moment.
Demonstrate why you are buying a product
Often when you take a child shopping with you, demonstrate to your child that the product you are buying is less expensive than the one you chose earlier, or maybe, the product you are choosing to buy is because it is on sale. This would help him/her understand that all products that you buy may not be of the most expensive range but sometimes could be because of its discounted price.
All services are always not paid or to be paid
During a vacation, engage your child in some social work where the child gets to help some old-aged citizens or children who need help. You will see that over time your child will realize that not everything can be won and bought by money. In fact, in some places, love and emotions matter more than anything else.
Make them understand how banking helps and works
Exposure to banks and their services in the middle school age is the most effective way of making your child understand how banks function. It will also help your child to understand how you save money and what returns you get after saving the money.
