Teaching Kids about Money, Why and How ....

In the current materialistic world, it is very important to teach our kids about money. We should make them aware about why we should save and what is the value of money. In this post we will learn few things which can be used to make our kids more aware and sensible about money.

1. Saving Habit through a transparent Jar/Piggy Bank

The normal piggy banks are good, but it doesn’t give kids a visual. Instead of that if we use a clear jar, they can see the money growing. Yesterday, they had two hundred-rupee notes and today they got one more fifty rupee note! We can talk to them about this and make a big deal about it growing!

2. Show them that stuff costs money

We need to take action rather than just saying, for example when buying a toy for him, ask him to take out some money from his piggy bank and let him physically hand over the money to the shopkeeper. This simple action will have more impact than a five-minute lecture.

3. Set an example

A study made in one UK university found that money habits in children are formed by the time they’re 7 years old. Means they are watching us. If we are spending carelessly for anything or everything they’ll eventually notice. Or if we and our spouse spouse are arguing about money, they’ll notice that too. We should set healthy example for them and they’ll be much more likely to follow it when they get older.

4. Give commissions, not allowances

We can Pay our kids some commissions based on chores they do around the house like taking out the trash, cleaning their room, or helping in kitchen. This will make them understand that money is earned—it’s not just given to them.

5. Show opportunity cost

We should make them understand how to take decisions and what is the opportunity cost. For example, by telling him, “If you buy this video game, then you won’t have the money to buy that pair of sport shoes.” he should be able to weigh decisions and understand the possible outcomes.

6. Stress the importance of giving

Not just earning but giving is equally important. Once they start making a little money, we should teach them about giving. They can pick a temple, charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.

7. Avoid impulse buys

“Dad, I just saw this new game. My friend has it! Can we buy it please?” have you come across with this type of requests by your kids?  Instead of giving in, let your child know they can use their hard-earned commission to pay for it. But encourage your child to wait at least a day before they purchase anything over Rupees 100. It will likely still be there tomorrow, and they’ll be able to make that money decision with a level head (rather than an impulsive buy) the next day.

Teaching your children about money at any stage is going to take time on your part. It won’t always be easy. But if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.

One of the best ways to teach your kids about handling money is to give them a chance to make some of their own!