5 simple ways to Inculcate money habits in your child
Financial literacy should be an integral part of every child’s upbringing. Teaching your children how to be finance savvy will help them understand the importance of money and savings. These creative minds are constantly picking up new traits that develop their minds and personality. Therefore, it is the best time to incorporate saving habits in your child.
The five money saving habits you can adopt are :-
- Use the 3 Jars technique: Spending, Saving, and Investing
The 3 jars technique is a time tested tip that has helped many parents incorporate good money habits in their children. They buy 3 jars and label them as Spending, Saving and Investment. Every time your child earns a penny, ask him to wisely fill it in these three jars, depending on his priorities. For example, if there’s no upcoming birthday or event where he has to spend or buy gifts, he can easily disperse that penny on the Saving jar, and later accumulate a certain portion of saving and transfer into investing jar.
This technique will not only help him learn how to allocate money for spending and saving, but also make him realize that investing the saving is equally important. “Investing money, increases money”, this is the easiest explanation parents can give their children, to nurture the investment habit.
2. Allow your child to be a part of your financial discussions:
Most parents discuss finances and money in the absence of their children, as they fear that when the child learns about their financial status quo, he/she may pick up a laid back attitude. Let your child know how and why you spend money on certain things. For instance, you can tell your child: “I shop on Wednesdays, because they have discounts and great deals. I also buy products in bulk, because it saves money”. Portraying such examples will help them learn money saving hacks as well.
When you epitomize your financial spending skills, it helps your child develop a pattern to spend wisely, and rout for methods which encourage savings too.
3. Delegate tasks and Assign responsibility
One ancient method that parents followed religiously was, sending their children to buy groceries. The theory behind doing so was that, a child learns how to buy the necessities within the assigned budget. Give them INR 500, and ask them to purchase the listed groceries, and observe their decision-making skills with the assigned budget. Not only will it help them reflect on the reality and after math of spreading their choices within a confined budget, but it will also make them prudent
4. Honor their savings monetarily and teach them the art of sharing
Children love to craft their creative edge to perfection. Use this attribute of your child in a way that adds some lesson to their financial literacy skills. Instead of spending luxuriously on expensive birthday cards or gifts, ask your children to craft the cards/gifts on their own. Motivate them by offering monetary rewards, when they design gifts or even indulge in some household chores. And with the money they are rewarded, ask them to navigate it towards a noble cause. This will help them contribute to the society as well.
5. Secure their savings officially
Opening a bank account is the best way to secure your child’s savings. Connecting with a bank, and opening an account will not only give them a feel good factor, but they can reap the benefits too that come with a kids savings account. Banks have tie ups with bookstores, movie theaters etc. that offer great discounts and amazing deals. With such deals, your child can save and have fun simultaneously without hurting his savings.
The need and want for money knows no limits. One is never satisfied! Thus, it is imperative to teach our children the value of money, the importance of savings and right investments. This will always stand him in good stead.
