Blog!
6 Ways to Inculcate Financial Responsibility in Young Children
Financial discipline is one of the most important lessons a parent can provide for their children. No school or college teaches money management skills, so parents are directly responsible for shaping their children's financial future. A child who is already learning financial prudence at an early age will be better prepared for real-world challenges than someone who is uninformed, spending, and generally negligent with money. Children's Day will take a step towards gathering financial responsibility for your child. Here are a few ways you can give your kids financial discipline.
Lead by example
Kids are starting to collect money habits very soon, so be careful what message you send to your children. If you tend to exceed your budget when it eats too often at a shopping mall or family, kids will notice and internalize it as kosher behavior. You can't just bend in and expect to be careful with your money. Likewise, lack of EMI and payment terms, unscrupulous loans, and disputes over husband's money are just some of the other practices that should be avoided. Remember, the way you work with your finances today will determine how your children will be managed tomorrow.
Give them Plastic money
A monthly contribution is a good way to learn budgeting. Give your child a set amount and use it for your expenses. If young people are allowed to manage their own budgets, they can better understand the value of money. The goal is to let the child set his own budget and use the money as he wants without any restrictions. Of course, as a parent, you need to keep track of how this money is spent so that your child does not gain unwanted social habits. In most cases, when a child comes under control, they become a more cautious dispatcher. This is especially useful in these times of online shopping and food ordering applications.
Set goals for their requirements
You can help your child set their financial goals and draw up a plan to achieve it. If your daughter wants an expensive device, tell her to start saving for her and offer a matching allowance every month. So if you save R 3,000 a month and put in an extra 3,000 R, it would save about 36,000 R in six months. If you contribute to the contribution, you also do not contribute anything in that month. She soon realizes that if she makes regular contributions, her savings will grow. Once he gets into the habit of saving for goals, he'll be able to manage his money better.
Learn to delay pleasure
Patience is a key factor in financial success, and parents must impose it on their children soon. Introduce the concept of investing and merging to your children. Open a fixed or recurring deposit on their behalf and show them how the money grows if you keep it intact for a long time. Older children can be introduced to equity investments and mutual funds. Most children will want to try to invest in equity. Don't try to discourage them. Your parent's job is to give them enough information and alert them to the risks. Sure, they make mistakes, but in this process they collect valuable lessons from investing.
Let them pay educational loans
If you have taken out an education loan for your child, make it a joint lender and require them to repay the loan. The necessary loan fosters a child's financial discipline when he starts earning and forces him to defer a large chunk of his salary. In this way, the child continues to bear the responsibility and will have to work hard to pay it back. Don't rush to repay your education loan unless your child provides a well-paying job. It sends the wrong signal and makes the child believe that he can always get financial help from his parents. Personally, when I raised two kids who are financially responsible, I can say that captioning is a very challenging task, but it is still the most rewarding and fulfilling experience.
Open a bank account
It's good to open a bank account for your child and give them a debit card. You can even provide an additional credit card linked to your own card. As the basic card holder, you can place restrictions on the card issued to your child. For starters, let your child make small monthly purchases with the card. The most important thing is to teach your child the importance of keeping the card details private. Review and discuss your monthly statements with your teenager. This will also help you monitor your child's spending model.
