While you teach your kid about the social norms and guide
them through their life, it’s important that you also teach them about the
importance of money and how to value it. Here are a few lessons you can teach
them very early on.
1: Patience is a
virtue
The very first
money lesson that you can teach your kid is “it pays to wait”.
Your kids are
smart and sharp; they know that you probably have enough money to fulfill their
demands. Whenever your kids demand something, ask them to be patient and wait.
This teaches your
kid that not every outing means that they’d get to buy stuff. This practice
will inculcate good behavioral habits like patience and restraint in your
child.
2: Either this
or that
Teach your kid
about plenitude.
Wants and desires
are mostly impossible to satisfy. Teach your kid that what they have is more
than sufficient. It is natural for a child to desire too many things- that too,
all at once.
You must teach
them the concepts of necessity, need, want, and abundance. When they demands
for too many things at a time, make them choose only one of them.
Making a choices
helps them develop a better understanding of prioritizing things.
3: Earning a
living is tough
When you swipe
that card to pay your bills, your child might not realize that credit card
bills need to be paid in full or that late payments can result in huge
penalties.
Make your kid
understand that everybody has to work hard to earn a living.
The best way to
teach this is by introducing a reward system. When they put in extra effort to
do something, acknowledge it with a reward and let them know that they have
earned it.
4: Borrowing and
interest
Teach your kids
about basic principles like debt and borrowing. Make them understand that if
you borrow something (like a loan from the bank), you have to pay it back
within a stipulated time period.
Here’s a simple
exercise to teach your kids about borrowing and interest rate. Borrow a small
amount from your child and then pay them back with interest at a later date.
Explain that you had to pay interest on the borrowed amount and hence the child
gets a higher amount than originally lent (and in turn, the parent had to
return more money than borrowed).
5: Money
management
Pocket money is
the ideal way to start with the money lessons.
Give them a fixed
monthly pocket money at the beginning of the month- and not a single rupee
more. Make them understand that expenses need to be managed with what they have.
6: There’s no
free lunch
From an ice cream
cup to a toy, everything has a price tag.
You can teach
your kids that managing finances is imperative for a sustainable living. For
every need or want, you have to endow a cost- be it money or time.
When you plan
your monthly budget, make your kids sit beside you and help them develop an
understanding of how money gets spent; Even the nice aunty that comes to clean
the house requires to be paid.
7: Save for a
rainy day
Savings will come
in handy during the time of crises.
Make them
understand that it’s better to save as much as possible from your income in
case of future emergencies.
The best way to
teach about crises and saving is by skipping on the monthly allowance once or
twice. This would inculcate good habits of saving in your child and help them
learn how to save money and manage a crisis.
8: Live within
your means
There are times
when your kids will be influenced by their peer group and make demands which
are out of your budget. Never be hesitant to tell your child that it’s out of
your budget.
Your kids should
know about affordability and be able to live within their means.
9: Start early
You child needs
to know that the earlier they start saving, the better it is.
If they need a
bigger present for the next birthday, let them start saving from today. The
earlier they start saving, the sooner they can reach their goals.
When they are
older, you should probably teach them the most powerful word in finance- compounding.
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