Money Wise

Money Wise

Teaching your child the ABC’s of money can be fun and easy you may find that the lifelong benefits of teaching children good money habits make it well worth the effort. Most people have strong feelings and opinions about money, based on the values and beliefs of their families and childhood experiences. Most often, these values, beliefs and experiences are different for each parent. It is vital for the healthy development of children that parents talk about these feelings and opinions and establish a consistent approach to teaching children about money.

As they grow, children learn in stages, adding layers of understanding to basic concepts that they’ve collected. This applies to their understanding of money as well. But while attitudes start to form early, a true understanding of economic concepts doesn’t begin until children are older. As a parent your role is then, to match your expectations with your child’s abilities. Here are some tips:

1. When teaching children about money, parents need to make an effort to think in children’s terms, not adult terms. For instance, a young child may not adult terms. For instance, a young child may ask his parents how much money they make, but what he may really want to know is not how much parents earn, but why he can’t have a certain toy. It is important for parents to use examples or activities that match the child’s stage of development so that he can comprehend what exactly it is that you are trying to tell him.

2. Children want to know how to operate in the adult world. It would help to see simple, concrete examples to explain financial actions. For instance, if you regularly give your child coins to put in a piggy bank, even if he doesn’t know the difference between a one rupee coin and a five rupee coin, he will understand that the piggy bank is getting fuller and that the action is something called saving. Any time money is earned, moved, spent, donated, shared, borrowed or saved provides an opportunity for parents to teach children how the money world works and what thoughts and feelings go into making money decisions.

3. Setting goals is a fundamental concept to help young people learn the value of money and also how to save. Nearly every toy or other item that children ask their parents to get for them can become the object of a goal-setting session. Children as young as three and four years can be inspired to start saving as long as you link the concept to a tangible goal that they can relate to. Benefits of saving to achieve the goal is an important aspect and provides built-in motivation. Kids love to be given responsibility and the change to participate in grown-up activities. Goal-setting for good grades or toys may help children learn to become responsible for their own future.

4. Many parents may agree that teaching kids to share their good fortune with others may be one of the most important money lessons that we, as parents, can share with out children. As with everything else in life, kids learn best by example. You don’t have to regale your child with tales of your charitable works to prove that you care. But there is no point in your hiding everyday acts of kindness either. If you’re taking a meal to a friend who has just gotten out of the hospital, say so. If you help raise funds for a worthy cause, you could talk about it. If you give money to an organization you believe in, it would help to explain why doing so is important to you. By talking about to whom and how you give, you not only show your kids the importance of giving itself, but you’re sharing your values about the issues that may be close to your heart.

5. Teaching your kids how to manage money begins with you. So it is crucial that you treat your own money with respect and a good way to do that may be to get your own financial house in order. Young children learn about money by observation and repetition, much the same way as they learn social graces. Children have watchful eyes. Small changes in your money habits such as bending down to pick up a 25 paise coin or counting your change instead of stuffing it in your wallet, could teach your child that even small amounts are significant. You can’t completely mould your child’s perspective, but you can teach your child to respect money and the hard work it represents.

6. Games are a great way to entertain your child while building a basic understanding of money. You could try playing games where he is the shopkeeper or vegetable vendor and you can be the customer. Have your child price items with stickers and use play money to buy the items. Young children intuitively associate size with value. The bigger something is, the more kids think it’s worth. To dismiss this wrong notion, try playing some simple counting games with money. Starting around three or four years, for instance, you and your child can have fun building stacks of coins of equivalent value. Then let him knock them down and start over.

7. Go to the bank! Check with your bank to see what accounts are available for children and the required minimum balance. When your child has saved enough in his piggy bank, take him to the bank and open a savings account. Encourage your kids to make regular deposits, so that they can see their money grow.

8. Alert children to the dangers of borrowing. Charge interest on small loans that you make to them so they will learn quickly how expensive it is to borrow someone else’s money. Credit is all about borrowing another’s money for a specified period of time.

9. Let your child know that you can’t afford to buy everything you want, either. This could be brought out while window-shopping together. Communicate about money and try to explain the bigger financial picture. For most kids, the financial wheels that keep their household running are invisible. Mummy and papa pay the bills, make decisions about spending and saving, and do the money-management. One way could be to invite your child to sit with you as you pay your monthly bills, which gives you a natural opportunity to talk about expenses and perhaps, some of the financial goals for which your family is saving. For example, you could show him that going for a movie the car, popcorn, drinks, time and energy. This will help him be more aware when making financial decisions.

10. Enjoy money. You work hard for it, and it’s a good thing to enjoy it by spending it on things that bring you pleasure. Dream together, such as buying a new home and how you’ll work as a family to achieve those dreams.