Anita takes her 10-year-old son Ayush to the mall once a month. She gives him a Rs.500 note each time. Ayush buys an item of clothing, and treats his mother and himself to ice-cream. Then, if possible, he buys a toy from the big toy store at the mall. But it wasn’t always like this..
The first day, Ayush spent all his money on a jacket he liked. Then they stepped into the ice-cream shop and he realized there was no money left for the treat. He turned to his mother, who refused to top up his allowance. Ayush threw a big fuss that day.
But with time, the boy understood the concept of budgeting. Soon he learnt to save a small portion on every trip. Once, he even saved enough money to give his mother a beautiful gift on her birthday. Mind you, this was over and above his other treats.
Being responsible with money from a young age can make a person a responsible adult. If you have not yet taught your kids about the importance of money, start right away. Wondering why this is so important? Take a look.
1.They will never learn to value money
If you do not teach your children the importance of money, they might think money grows on trees. They will not value money and may become irresponsible spenders. So, teach them how hard it is to get real money in your hands. Explain to them why you must spend money with caution. This is the first and most valuable financial lesson that you must teach your children.
2. They lack financial patience
A child who does not understand the importance of money may not like waiting when he needs it. Teach your child to be patient. Explain that money comes in at specific times. Also, explain that money is a reward for a job. He needs to do the work first and then wait for the money. If you do not do this, your child may become impatient with his needs. He may turn into an impulsive spender. Unmanageable credit card bills, a low bank balance, and insufficient funds could follow.
3. They don’t understand the importance of saving
You need to teach your child the importance of saving money. It is difficult to change financial habits later in life. So, if you do not introduce your child to the concept of savings, it may cause him a lot of trouble later on. Encourage your children to save a part of their monthly allowance and highlight the importance of building a corpus.
4. They have no knowledge about budgets
Budgeting is as important as saving. Teach your child the importance of prioritising their needs and spending accordingly. Children must learn that everything they want is not available. If your children grow up without understanding how to budget, their finances may be a constant mess later in life.
5. They lack financial discipline
Last but not the least, teach your children to exercise control over their finances. From paying bills on time to spending and saving, it is good to teach financial discipline. Involve your child in chores like getting the phone bill from the mailbox and reminding you to pay it. As mentioned above, it is difficult to change a mindset later on in life. A child, who does not grow up with financial discipline, might not pick it up later as an adult.
The bottom line
The early bird gets the worm. So, start instilling good financial habits in your children. Make them value money. This will make their adult lives a lot easier. It will also take them one step closer to success. Remember that you will not always be there to support them. So, they need their own money to survive and sustain themselves.
While credit cards come with a host of benefits, they must be used carefully, and never in these situations!