Children need to be taught good money habits at a very young age. This helps them make better financial decisions in the future. Without it, as young adults, they might end up overspending and saving little to almost nothing.
Hence, the responsibility falls on you as parents to impart money lessons to your children. While you prepare for their future, also teach them money management that will help them to live financially fit lives.
Following are seven ways in which you can teach good money habits to your children.
1: Discuss about finance with your children
Most parents think that discussing the significance of finances with their children can be a very daunting task. However, avoiding the subject altogether will make your children lack confidence in earning, maintaining and multiplying money as adults. As parents, you should share your financial experiences and perspectives with your children. Also, don’t be afraid to share your financial mistakes with them along with your success stories.
2: Make Learning Fun
Good money habits can be taught at a very early age. You can start teaching them what money is as soon as your children learn to count. Later, you can teach them how it is spent and what value it holds. You can make learning fun by incorporating money lessons in activities and games. This keeps them interested in learning more about money management.
3: Lead by Example
Children tend to learn the most by observing their parents and their behavior. Likewise, they learn most things about finances at home. Hence, as parents, your spending habits and how you manage your accounts can further affect their financial habits.
Make a budget and involve your children in the process. Keeping track of your expenses will show your children how to be proactive when balancing income and expenses. This will help them learn the value of money.
4: Have Your Children Earn Money On Their Own
Although you give your children monthly allowances, they truly learn the value of money when they earn it on their own. It further teaches them to be self-sufficient, independent and resourceful. If you have teenagers, you can encourage them to take part-time jobs, such as babysitting or walking dogs, instead of giving them monthly allowances. On the other hand, your younger children can earn money by completing small household tasks assigned to them.
5: Teach Your Children about Budget and Savings
You should encourage and help your children set a budget. Moreover, help them stick to that budget and save any extra money that comes their way. The saved amount could later be used for something they have been wanting to buy. This way, they will understand how good it feels to plan for a goal and be rewarded in the end.
6: Help Them Distinguish Between Needs and Wants
It is up to you as parents to help your children understand the difference between needs and wants. This helps them spend money wisely. You can involve them while setting a monthly budget. This will encourage them to understand and follow a healthy financial lifestyle later in the future.
7: Talk to Your Children about Investments
Once your children reach a particular age, it is good that they learn the concept of investing. It will help them understand how to grow their earnings through an investment plan. Start by setting up a small fixed deposit under their name and allow them to track its growth. Since you have been making investments, you can involve them in the process. Help them understand various ways in which they can leverage their income.
ULIP helps you accomplish a variety of your investment needs. There are different financial providers that offer different ULIP plans. With a ULIP policy, you can invest in funds with flexible premium options. Moreover, it gives you the flexibility of switching between funds as per your changing needs.