How to make your children money-wise
By Tania Jaleel
Children look to their parents to set them on the right path to adult life. From basic life etiquettes to how to walk, how to drive, it is the parents’ job to make sure that their children are not thrown in the deep end. Schools, too, teach children about trigonometry, accountancy, statistics. But what about basic money matters? Far from reaching close to retirement age without any real idea of how money works, money-related education should begin at the secondary school level. It should be taught in small practical doses and continued throughout school and college.
Currently since many schools don’t have personal finance as part of their curriculum, it is parents’ job to teach their children the ABCs of money.
Here are small ways you can make your child money wise.
Children are like sponges
Kids learn from what they see around. So how you are with your money, is the way your child will be with his. If you don’t give a second thought to swiping your card or make your purchases on impulse, chances are that your child would have picked this habit up.
What should be done: Let your child see that money should not be spent without deliberation. Consider your money habits as a family, so you know what to expect from the children you have sent to college.
Make budgeting a family affair
Teach your child how you budget the family expenses and ask for his opinion, if need be. This will not only help your child in the long run, it make him spend his own pocket money better. Chalking out a monthly budget will help your child learn prioritise money matters and more.
What should be done: If your child needs some extra cash, encourage the possibility of taking on part-time work even if it is a waiting tables. We are careful with our own money, your child, too, will spend the money that he has earned from hard work in a more judicious way.
Money does not grow on trees
Teach your child that the supply of money is limited and that even if there was enough of it, must be used carefully. Giving your child a fat allowance or money whenever he needs it is never a good thing. They might get angry at you for the moment, but in the long run it will only benefit.
What should be done: Stick to the monthly allowance that has been agreed up on. Make sure they learn to live within that amount. Only pay extra if it is absolutely required, say, to buy new school books or if it is for a school trip.
Basics of banking
It always a good idea to teach your child early on in life the basics of banking. It may not be as fun-filled as teaching them how to drive or swim, but it will be beneficial for them. Teach them the rules of safe banking, using a debit card, online transactions, using mobile wallets, and perils of overspending on a credit card. They should also know what must be done in case they lose a debit or credit card.
What should be done: Financial literacy is an important skill and make sure your child knows the minimum like operational and security features of banking products that they use. If you are opening a bank account or starting an investment for your child, let them fill up the know-your-customer form, with your guidance of course.
Get a digital helping hand
There are online tools like apps that kids can use to account for their expenses under multiple heads. Even the Reserve Bank of India, as part of its financial education initiative, as games (https://goo.gl/nMWJ1Z) and comics (https://goo.gl/xepynY) that teach children about the basics of banking.
What should be done: Go on to the app store on your phone (or on your child’s phone if they have one), there apps that are free and ones that charge you some money for downloading. Although there is technology available at your fingertips, it should be introduced to children only when they are able to understand the concepts.
Spending money with friends
Most of us split the bill down the middle when we go out with friends or colleagues. And we do sometimes take advantage of that one friend who is frivolous with his money. Child are the same. Money habits they display are noted by their friends, and will lay the foundations of how money transactions happen in a group.
What should be done: Tell you child that it is better to split the bill equally. And that lending to friends is a big no-no.
Stick to the date
Remember, it is monkey see, monkey do with kids. If you don’t give their allowances on time, especially in the case of children staying n hostels, or if you don’t pay your bills on time, your kid will most probably have that sort of attitude towards his money deadlines.
What should be done: Set a specific date and make sure you have sent the money to your child before that date. Pay your bills and EMIs on time. Make sure your child knows that not paying bills on time will lead to monetary penalties.
If you have investments where they are first or second holders, after they turn 18, these will not be accessible to you. You will not be able to access, redeem or close any of these accounts without their consent and signature.
What should be done: Ensure you have converted the minor accounts into major accounts. Their signatures have to be attested by the bank, and submitted to the concerned financial institutions.
Investment guru, Warren Buffett, when he was asked what he thought is the biggest mistake parents make when teaching their children about money had said, “Sometimes parents wait until their kids are in Read More…
Via:: Economic times – Wealth