My son is 7 years old and I would like him to acquire some tips on money handling and financial planning. How do I go about this?
This is the just the age to get kids to understand good money habits.
To begin with, we as adults need to set an example to generation next on how to save money, how to budget our purchases and on spending habits.
Kids observe every time we swipe our credit/debit card and purchase a shopping cart of products. However, they may sometimes fail to understand where the money comes from and the value of the products purchased.
It is important for the parents to make them understand how this card works and how it gets uploaded with cash so we can make our purchases.
I recommend we use less plastic money in front of kids to make them realise the value of real money. Let them learn that if they want something, they would first need to work for it; they can’t have everything that they demand for.
I know parents reward their kids for doing odd jobs around the house. This is probably the best way to make kids understand the value of hard work. Getting children to do some chores around the house and paying them for their time and effort is one way to teach them the value of money.
Another way to teach children financial planning is to give them two money boxes – one to use for savings and the other for earnings to be used to make purchases.
Encourage them to realise the value of their efforts in completing tasks assigned to them.
After completing a task, allow them to reward themselves with a gift by dipping into the earnings box. This will make them realise the value of work.
Let your kids experience real-life experiences in accepting the value and handling the money. Ask them to organise a kids-only garage sale, for instance. You could assist them in labelling the value of books and unused toys. They could even create some handicrafts and put them up for sale. Such sales will give them a taste of the real world - a real-time experience in learning about earnings and expenses.
Another way you can help them learn the art of finance is by asking them to create two lists – of what they want and what they need. The two lists will help them understand the difference between wants and needs and will go a huge way in making them realise the value of products and of money while also teaching them valuaable lessons in financial planning.
While it is important to teach children the value of saving, spending and investing, it is also important to inculcate in them the importance of donating for just causes. This will direct them to utilise money beyond just spending on things.
Dhiren Gupta is the managing director of 4C Mortgage Consultancy, is a financial expert