Childhood is the most appropriate time to inculcate healthy and positive habits in kids. As with all other things, managing money is something which you can easily teach your children when they are young.
Here are 4 money habits for financial wisdom of your children:
The art of budgeting
The evergreen rule for effective financial planning is developing the knack of budgeting and sticking to those budgets. Teach your kids the importance of budgeting their expenses in line with their pocket money, their current income source. Tell them the importance of “save first, spend later” principle. Review the budget every month with your children and see where they can do better at managing money.
Avoid impulse buying
Human beings learn best from their mistakes. And the same holds true for children as well. Give your kids the monthly pocket money, and let them splurge for a couple of months maybe. There will come a point in time when your child needs something but cannot buy it as all the pocket money has already been spent. This is where you can tell the kid that buying ‘unnecessary’ stuff always leaves you in a tough position and you end up depleting your money reserves for buying things that actually matter. Impulse buying should be avoided at all costs, and this is one of the most useful things you can tell your kids when it comes to money management.
Save as much as possible
Talk of money management and how can savings be far behind? Children learn from their personal experiences and nothing can be more enriching for them than working towards a goal and then achieving it.
Say your lovely daughter wants to buy that tempting box of candies. How about telling her to save a fixed amount every 10 days, and then buying that box which she had been eyeing at the end of the month? This is the best way to inculcate the habit of saving from a young age, and ensures that your children will be in a good position when it comes to savings later on in life.
Money is ‘earned’
Visiting the banks or ATMs might create a false perception in the minds of kids that money is something that is ‘easily available’. Make them realize the importance of working hard and earning money. Give them incentives for doing something good in their routine lives and they will always be willing to do or achieve that thing in future as well, for they will always want to earn incentive and recognition.
Imbibing healthy financial habits during the early formative years is the best thing you will do for your children. Start today!