Parents are their child’s first teachers. Kids observe their parents’ behaviour and learn from them. Inculcating good money habits in children at an early age can improve their financial acumen. So, here are a few good money lessons you must teach your children.
Practical use of money
Let your child accompany you to the market. While shopping, explain the payment methods, the use of bills and receipts. Teaching the concepts of cash and card transactions will help them understand finance better.
Saving is the key
Saving money could support you during times of uncertainty and emergencies. You should educate your children about this. If your relatives give them money when they visit, you could encourage them to save that money. Giving them some tips to save money could help them know more about money management.
Investing your money
Idle money reduces in value over time. Invested money not only retains its value but also grows. To achieve growth in money, it is important to invest. Suppose you ask your kid to invest Rs. 100 with you. You can give him Rs. 110 after a week. As kids grow up, you should teach them about the time value of money, while highlighting different avenues like mutual funds, real estate, stocks, etc., wherein they can invest their money.
Importance of a bank account
Banks allow minors above the age of 10 to open a savings account. You can take them to your bank and show them the whole process of opening an account.
Money is earned through hard work
Try giving them some money for the chores they perform in the house. In this way, you can make them learn that money is earned by working hard. They must not look for easy money.
Budgeting their expenses
You should encourage them to develop their money-saving habits. Suppose they get Rs. 1,000 per month, you could teach them to save at least 30% of this money for use in an emergency. Let them make their spending decisions out of the remaining amount. Tell them about prioritising their expenses.
Health is wealth
Healthcare bills can sweep your savings away in moments. Hence, you can save your wealth from eroding if you maintain good physical health. The COVID-19 pandemic has been an eye-opener for humans. It is our duty to pass on this wisdom to the future generation.
Avoid debt unless necessary
Educate your children to avoid debt unless it is necessary. They should also avoid debt if they do not have the means to repay it. The subprime crisis of 2008 in the US was caused due to excessive lending to those who couldn’t repay it.
Money is not everything
You may have heard your parents say that money can buy a bed but not sleep. So, teach your children the importance of money, but also tell them that money is not everything. Also, teach them to remain honest in their work.