While there are various aspects of parenting, one of them is certainly getting your child ready for the outside world. Your child will one day outgrow the need to be sheltered by you and it is necessary that by that time, he or she knows how to take care of themselves. Having said that, financial management is one of the most essential things parents should teach their children, way before they become financially independent. Financial literacy is not covered in formal schooling hence it becomes the responsibility of parents to teach that to them. Before your child enters high school, it is critical that he or she understands how to manage money effectively. Here are some ways you can prepare your child some basics about money management.
Saving
It goes without saying that saving is probably the most crucial thing one needs to learn to live a financial turbulence-free life. There is no better time than adolescence to start learning about it. Young ones, when they get money from relatives or family members as pocket money, will be tempted to spend them all on things they love. Parents should teach them how important it is to save, especially during their teen age, when part-time jobs make money an everyday reality.
Budgeting
This is the next step to saving. Once your child has learned the necessity to save, it is important for them to learn to plan their expenses so that in the near future, their expenditure does not overshoot their revenue. One can start by simply teaching their child to write down all things that can be counted as expenses on a sheet of paper and work their pocket money around it.
Financial tools
Your child may have initially started saving money in piggy banks but it will soon be time to introduce them to private bank accounts, debit cards and UPI payments. Familiarising your child with these tools will make sure they are well accustomed to using them by the time they are ready to leave home to start their career.
Avoid impulse buys
Children, in their adolescent age, will often cajole you for letting them buy something they want. Do not give in every time. Let your child know that they can pay for it with their hard-earned commission. However, advise your child to wait at least one day before making a purchase. This will teach your child to buy with a level head instead of impulse buying.
Allowance
If your child has not yet started working part-time or finding other ways to earn money, it is a good idea to start giving them a set allowance either as a gift or in exchange for duties around the house. Also, involve them in money matters of the household from a young age so that they are aware of financial hurdles.
