Important Money Lessons for your Children

‘Money is the root cause of all good’— Ayn Rand. Just like all of you who are so much concerned about saving and managing your hard earned money, your child should also be instilled with management skills and the basic know-how’s of money.

While your children's teachers share responsibility of teaching them to read and write, they won't do much to help your children develop basic financial literacy skills. Beyond simple addition and subtraction, there just isn't enough time in the school day to do it all.

So take your child's money management education into your own hands.

When it comes to money, you must remember that it is important to know how your child thinks about money. Most children are concrete thinkers who can demonstrate progressively organised and logical thought but have a limited ability to think abstractly.

Preschool and elementary aged kids will have trouble understanding abstract concepts like inflation, interest rates, and saving for a college education that is 12 years away.

Therefore understanding the way your child thinks is the key to providing him or her with a quality education in money management. Here are a few ways to help your child learn about money:

1. Buy a piggy bank

The best way to make your child understand about money is to buy a piggy bank for him and give him a stack of coins to put it in. Ask your child to sort the coins in a variety of different ways- shiny versus dull, big versus little. Even though he won’t understand the concept of saving but by doing so, he will get a touch and feel of money.

2. Give pocket money

Start giving a weekly or monthly pocket money to your child once he becomes a bit older. By doing so, your child will be able to make independent money decisions. You can even fix an allowance for your child on the basis of daily chores done by him. Earning money this way can teach him the satisfaction that comes from working for a goal.

Your child will also understand that the more work that's done, the more money he earns-a valuable life lesson.

3. Introduce financial terms

Get your older children to understand words like saving, investing, donating, pension, financial goal setting and he will thank you in the future.

4. Open a bank account

Opening a savings account, using the rupee-counting machine, comparing prices, and paying for items and receiving change are a few everyday ways to make your child learn about money.

5. Summer jobs

During vacations, make your child join a small summer job. This way, he will keep busy and also learn the concept of earning. He will start valuing money and know what it takes to earn it.

6. Set the right example

Last, but not least, be careful of how you talk about money in front of your child. Do not complain about bills or fret about money, and never use negative terms about finances. If you do so, your child will also feel negative.

The most important prerequisite for training your child in money management is getting yourself on the right financial track.

So, parents, remember that some lessons still start at home. Managing money wisely is one of them.