Being able to handle money at a young age gives children the confidence to manage their finances when they grow up. In current times, although children are receiving education and becoming digitally literate, it is important that parents make their kid financially literate as well so the kids do not struggle as adults.
Here are some of the tips which will develop constructive money habits in your chidlren and prepare them for the future:
· Take them out for shopping
Children observe their surroundings and learn from them. When they are out with you for shopping, they understand how you have to use money to buy items. You may tell them about shopping but it is better to demonstrate it for them to understand the process of buying things.
· Gift them their savings account
Opening a savings account for kids will motivate them to put efforts into saving their money. Involve them in checking their account balance and get them an updated passbook every time they deposit an amount. Children under the age of 18 can have a joint account with their parents/guardian having the signing authority.
· Encourage them to purchase on their own
Instead of buying everything for your kids, especially expensive toys or gadgets, let them purchase things with their own money. Tell them the concept of goal setting and ask them to set a goal that they will save a certain amount for purchasing a particular item. This will be one step closer towards making them independent.
· Set a monthly allowance
Instead of giving them money as per the need, analyse the amount required for their monthly expenses and give them the same every month. Understandably, if there are any unexpected expenses like a school trip or some new equipment, you can give them extra money. Otherwise, give them a certain amount every month which they can use for usual expenses.
· Teach them about investment
Not only about saving money, you should also teach the concept of investing it. You can talk to them about bank deposits and other liquid funds. Once they understand these ideas, you can also share other investment avenues with the kids.
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