Financial Literacy is a very important aspect of human life. It is essential to teach your child about financial education for a better future. These are some important money habits that kids must be taught. Start teaching them with examples, as per their age and understanding level.
Money Lessons to Teach Your Kids
1. Teach kids about Savings
“Saving money will save you back”. Saving is a great habit, that kids need to learn from the beginning. Kids need to understand that money doesn’t grow on trees its earned by hard work, so before spending it, one should collect it aside and leftovers should be spent. Saving gives protection from any financial emergency. It helps in purchasing the assets, avoiding debts, reducing financial stress, and specifically, it makes you financially independent. When you become financially independent, you will become a happier person. You will be able to set your eyes on your dreams, you will look ahead, and try your maximum to accomplish your goal.
Educate kids about saving money through examples. Tell them about the benefits of saving. Keep them motivated to save more and save often. Saving helps you to see what’s possible like you wanted to join any class, savings can help you with this. More things can be done as you can go for a swimming class, dancing, gardening, any online learning skill, and so on. With the help of savings, one can do all the things that they are not able to do before.
2. Limited money, how to spend?
Before spending money one should always differentiate between their needs and wants. Needs are always fulfilled earlier than wants however wants can wait. Kids have fewer savings compare to adults so they must know how to spend it rationally. Instruct them to use their money in a way that they would be able to create more money from it. Savings and Investment work well together.
Make your kid understand the benefit of the investment step by step through stories or examples. Money is required to be spent on productive things such as investing in books or for learning any new skill, which leads to value addition to oneself. These days children’s education has become costlier and with the help of the elder ones, kids can easily start investing their money in mutual funds or they can open savings/fixed accounts, which will help them for their higher studies.
3. Earning an extra amount
Earning your money on your own makes you feel cheerful and independent. Asking your parents for money, for every cost doesn’t feel nice and makes you dependent. Dependency is awful. Earning an extra amount from an early stage of life makes you confident (not really for toddlers). Motivate kids to use their talent from an early stage to earn extra money.
There are multiple ways through which kids can earn an extra amount. Such as content writing, video editing, animation, photography, selling art and crafts online, selling unwanted products, starting a YouTube channel with a new concept, and many more. Every child is special and unique let them explore, by exploration they can learn and earn better.
Today’s kids are highly interested in gadgets, they must be known as gadget guru. Dwelling in gadgets can help them in learning a new skill through it, as we all know today the internet has so much to teach eventually it will also help them to earn extra money.
4. Sharing is Caring
Before spending money, learn the value of money. If you will spend all your money on yourself, you won’t able to understand the value of money. Even a small amount of money can add light to someone’s life. Sharing is a pleasant habit, it makes you feel good, grateful, and makes life real.
Sharing is not only limited to money or any tangible thing, even good thoughts, words, or a good idea can be shared for people’s welfare. Kids need to learn to share from a very early stage. Make them learn by playing games with other kids or in any group.
Teach them to share especially with the needy ones and let them know that the more you give, the more you get. It is important to share your money with others, somebody who needs it. Sharing with others sustain kindness and motivate you to earn more for yourself as well as for others. Like they can share 1/10 of their wealth with the needy ones.
5. Teach them about the different forms of money
Money is one of the most important inventions. Money is also evolving with time. Kids should know that when there was no money, at that moment people used to exchange their goods for livelihood. It is known as the Barter System. After that people started using Commodity Money such as pearl, tea, wine, cloth, etc as a medium of exchange. The deficiency of commodity money lead to the evolution of Metallic Money, it includes gold and silver. Due to the weight and purity issue, the government intervened and took this process into its hands, and then after Paper Money came into the existence.
Paper Money is current money, it includes currency notes, coins made of bronze, nickel, or copper. Because of safety and counting issues, Paper Money became inconvenient and money evolved further and Bank Money came into existence. Bank Money(credit money) involves cheques, drafts, bills of exchange, etc.
Bank Money also includes Plastic Money such as debit cards, credit cards, and ATM cards. It is the most important money, it’s popular in modern times, convenient, and safe for large payments. Nowadays online payment and receipt through applications are also becoming a popular mode of transactions, few apps names you must have heard before such as Paytm, UPI, Google Pay, etc.
Financial Literacy is a key to a great future. Let your kid know all these money habits to make them good in making decisions related to money and budgeting.