Authors: Dilshad Pajnigara and Tejal Khawse, Financepeer
A study shows that kids from their money habit at a very early stage of their life and that they are observant when their parents make monetary transactions. Here are a few ways, you can teach the kids:
1. Introduce the concept of money: The right way of introducing your child to money is, introducing them to coins first. Use real coins, would only improve their math skills and thinking capability. Encourage them to activities like counting the coins, saving them in a piggy bank. A clear Jar to save would help to have a fair idea as they can see the pile of money grow. Help them make the jar attractive with glitter or attractive markers around the jar, a toy sticker, or chocolate, etc.
2. Value of money: Explain to your kid how money is earned There is a cost to everything You’ve got to do more than just say, “That pack of toy cars costs Rs.1000, ”Instead, help them grab some money out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture. Help them understand it is not wise to spend the entire amount in the jar. There is a limit to how much you can buy with the money you have. Make them understand “You can only spend the money you have today. “It is inevitable for them to understand the importance of savings and spending how savings could help and how spending on the right item is so very important.
3. Set Priorities: Help them set and understand their priorities. Let them decide what is important and helpful to them and accordingly define priorities. Make them understand the consequences of overspending. For example, “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and understand the possible outcomes. Help them make a wish list it's hard for kids to set priorities, so sit down together and make a wish list of the things your child wants to do with her money. Then help her rank the list by discussing what's important about each wish. .By this they will understand the difference between what they need and what they want and avoid compulsive buying.
4. Allow them to make mistakes: Let your kids make their own spending decisions, even if it means making mistakes and wasting their money. It's a valuable teaching tool.
5. Provide your child with an allowance for finishing chores: Give them incentives once in a while, give them a small amount in return for the small errands done by them. For example reward them with 5 Rs if they keep their toys in place after playing or when they finish their homework for a week on their own, reward them with a toy. Such activities will help them to value money and understand the hard work done to earn that money. Help the child think of things that they want to save for to help motivate them to complete their tasks. It is important for your kid to realize how good it feels to work towards a goal and be rewarded in the end. If your child doesn’t complete the chores, don’t give them the allowance.
6. Stress the importance of giving. Once they start making a little money, be sure you teach them about giving. They can pick a charity or even someone they know who needs a little help. Or help poor people by the road. Eventually, they’ll see how giving doesn’t just affect the people they give to, but also the giver as well. It teaches them that money can be used to help people, rather than just for buying things. Let them know that the amount they give doesn’t matter but the thought behind helping someone counts by this activity help your kid understand “You are very lucky. One way to say thank you is to help someone who isn’t as lucky as you.”
When it comes to teaching your young kid about money, remember to keep things simple. Use concrete examples throughout your day-to-day life, they learn a lot from the activities the parents do in their daily routine. Each child has a unique way of learning and adapting, make sure you find the one that best fits your child.