With the use of credit and debit cards in the times of digitization, frequent use of UPI payment methods, online purchases, internet banking, insurance, investments, etc, it can get tough for adults and kids to keep a tab on the money. Hardly anyone keeps cash or uses cash these days. And if you are a keen parent who wants to teach your child the value of money and give some economic ideas to make then future-ready, then where do you start from?
Here is a break down some of the ways that can solve the purpose of teaching your kids the value of money:
With the rising cost of education in India, most of the parents are worried about funding their child’s higher education costs. So, if you are planning to buy a child education plan or a child insurance plan to secure your child’s future financially and to help him meet his important milestones in life such as higher education, marriage even when you are not around then let your child know about this preparation. Let him/her know the money that you pay every year to ensure that your child can take up his future goals without any financial constraint.
Let’s say you have invested in a lic child plan, let your child know the financial protection that it offers. And the amount of premium that you are paying now to ensure a safe and secure future for your child. This will serve two purposes- firstly your child will know the importance of money and how it can be saved to meet future requirements, secondly the security that it offers to your child with the maturity benefits and the death benefits.
Most banks in India offer a provision to open a separate bank account for their minor child below the age of 10 years and a child between the age group of 10 years and 18 years. If your child is below the age of 10 years then you can open a joint account in your name and your spouse name. This helps your child know how putting money in a bank savings account instead of keeping cash helps in growing money and how money increases with the accumulation of interest earned on investments.
Some bank savings accounts also provide credit or debit cards when your kid turns a little older. This way your child can understand that spending money using a card is the same as using cash. It can be a good learning curve for your child in the early stages of his life.
Some parents allow their child to take charge of the account once he turns 18 years old. By engaging with their savings account, your child can be taught lessons about money management, saving, investments, and interest earned.
One of the best and proven ways to start your child’s financial education is to start putting spare money in a piggy bank and give them a flavor of saving on their own. Saving Rs. 10 a day and putting it in the piggy bank can also build a good corpus. let your child do it and open the piggy bank every year and let your child see or count how much money he/she was able to save over the period with that small investment.
Most importantly this money can be used to buy something your child has been wishing to buy like a book, toy, dress, etc. This is one of the simplest and proven methods to instill financial discipline in your children starting from an early age.
To imbibe gratification and good spending habits in your child, a lot of parents try the waiting method. For example, your child wishes to buy a computer then you can wait a month or two to help your child comprehend the concept of waiting. This will be a great opportunity to teach your child the value of waiting to save and spend. And how starting small and waiting would reflect on how learning to wait and saving is the key factor in money managment.
Your child must know the fact that one has to work hard to earn. Let them know that some people are more privileged and some might not be. Everyone's spending capability differs. let him know that he/she is lucky to get everything that they need and desire and some people do not have money to buy those things. This will help your child value the things that are available to him.
One of the most important habits that you can inculcate in your child is goalsetting. You can discuss how you and your spouse plan and save to make it for your children as well as your own goals. You can help your kids categorize their goals in three categories such as saving for the things they need, the experiences they desire like travel, their future goals like studying in a particular university and their career goals and sharing the things with others. This will help your child value the money and things that he has at his disposal.
Discussing charities and philanthropic deeds help kids know about to which kids can donate, and help others who are deprived of the privileges with the money he earns in the future. It will be great to discuss the things you do to help your child understand better. It helps your child in allocating the money towards important things but also giving back to needs people.
Over to You
Teaching your child the value of money can be a long process. However, if there is an ongoing discussion, it will give your child the value of money in the entire process. Starting this discussion in their early childhood that continues till high school will ensure that your child develops an understanding of money matters and finance while growing up and help them secure a financial stability in future.