“If you raise your children to feel that they can accomplish any goal or task they decide upon, you will have succeeded as a parent and you will have given your children the greatest of all blessings.” – Brian Tracy. “Any informed borrower is simply less vulnerable to fraud and abuse” – Alan Greenspan. If you consider these two ideas simultaneously, you would understand the importance of teaching the superiority of money to your child from a young age.
It is never too bad to start as young as possible, if you are considering education and finances. The faster you start, the quicker and better would it be for you and your kids to learn about handling their finances responsibly. And the more responsible can they become in handling their finances, the better will it be for their future. So, whether it be personal finance or banking, it’s important to start young.
Personal finance and banking tips for kids
Tips on what you can do:-
What you do and how you manage your finances affects the relative sense of your kids quite a lot, with regards to the finances. So, it would definitely be better if you could:
- Start managing your finances more responsibly – It would be wiser and better to start your child’s financial education by being a responsible person yourself. So, if you have been more of a spendthrift, start considering your finances more seriously than before.
- Start saving more and set up a goal for the same – Rather than putting money into your savings account mechanically, try out some more exciting options. Some of the options may seem to be risky enough, but it still may be worth enough for you to try those out. For example, investments can be risky, but if you can do it the right way, your savings can even double up. So, save in every possible way, starting from frugal living to retirement savings and investments.
- Do away with the usage of the credit cards – Using credit cards for shopping can lead you easily into debt. This is also going to have a negative effect on the financial understanding of your kids. So, do away with the usage of the credit cards as much as possible. It would be better to keep aside the cards for emergency purposes.
- Maintain a list of the debts and make a proper debt pay off plan – If you have quite a few debts and if you are just starting to sense problems, it would be better to make a list of the debts and even make a plan to pay off the debts – may it be debt snowball, avalanche or debt snowflake method.
Helping your kid with finances:-
- Open savings account for your kid – Open savings account in the name of your kid or kids. Have them put money into the account every month, or even better, every week. This would instill in them the requirement for and the importance of saving money. With time, this gradually is going to become a habit for them.
- Ask them to earn a few dollars rather than giving them monthly allowance – Rather than making them totally dependent on you, have them earn money, if your kid is in school, the vacations can be used for making a few extra dollars. Or if your children are in college, they are old enough to start earning. So, either lower their allowance or completely stop it after a point of time. This is going to compel them to start earning and would help them learn the importance of money.
- Discuss with them about the difference between wants and needs – A very important part of financial education is understanding the difference between the wants and needs. While, it isn’t possible to live without the needs, it definitely is possible to stay away from the things that you can actually do without. The things you want are not necessary for our living, and therefore, it is not always wise to spend money on them. Although, you need not do away completely with what you want, there is a need to exercise control over your wants. You need to discuss about this with your kids, so that they grow up to be a responsible human being who can go on to manage his/her finances well, later in life.
It may take for your child to learn the financial tricks. Therefore, it is extremely important for you to be a patient teacher, who can not only teach about the technicalities, but have the ideas drilled into their mind more practically than ever. This won’t only help your kids to stay grounded but also to grow up a financially responsible person. In the long run, this is going to help your kids a lot with respect to their education and career alike. For, too much of debt and un-manageable finance leads to bad credit rating, and that can affect your kids chances of obtaining a job, or buying a house too.