Parents are the first source of learning in a child’s life. Children learn all the habits from their parents, from financial habits to cleaning routines to overall lifestyle.
To make your child better than you in any field, you have to change your habits so that your child follows in your footsteps. Specifically, parents influence their child’s behaviour and habits when we talk about finances.
If a parent is not able to handle their finances well, usually the children follow in their footsteps. They are also not able to manage their money issues. It is your prerogative to learn and apply effective money managing techniques as a parent.
The effective money management
While reading this, if you feel that you too need some guidance for your financial behaviour and decisions, do not worry. This blog will guide you in different ways through which you can teach your children the importance of money and ho to be a financial genius when they grow up.
There are many ways through which you can make your kid a financial genius, irrespective of your financial knowledge.
Tips to pass on the financial knowledge
1. Be comfortable while talking to your children about money
Even in today’s times, when technology is advancing at lightning speed, many parents still feel uncomfortable while talking to their children about money.
Parents should be honest and transparent about their finances with their kids. Parents should come out of this taboo and be open about finances.
Considering today’s pacing world in every aspect, it is vital to teaching your children about handling their money to give them a clear picture of their surroundings. Giving them this knowledge will make them confident and better decision-makers.
There are several ways to start a financial conversation with your children. One such way is to use anecdotes. Another way is to behave the way that you want your child to lead their life.
If you want your children to save more, you have to start saving your money every month to set an example. With this pragmatic approach, you can play with numbers with them and explain the concepts.
2. Start at an early age
If you feel that it is too early to talk about money with your kids, reconsider your decision. It is not essential to fix a specific schedule for an hour to have a financial session.
You can have a friendly rapport with your child and make every moment a learning moment for them.
Nowadays, most of us use plastic money for our transactions, and children observe every bit of what we are doing. They may be fascinated with these debit and credit cards being used.
Children are more likely to see and understand rather than learn through lectures and theories. You can tell them how to withdraw money and deposit so that they can be independent in their own transactions.
3. Be transparent with your kids but avoid over sharing
The thumb rule while dealing with your children is, to be honest with them in every aspect, such as finances, home decisions etc. Do not lie to them, as it creates impressions forever on their minds.
Do not lie to them and be transparent about your financial status and habits when it comes to finances. One of the finest examples is when you are at a supermart, and your child demands something from you.
Instead of saying that you are out of cash, you can give them a genuine reason for not buying that particular thing and explain to them the drawbacks of getting it. If you tell them you cannot afford it for them, your child may have trust issues with you in future.
Be transparent and straightforward with your children. Along with transparency, it is essential to remember not to overshare with your children either.
4. Self-control is the key
Self-control is an essential characteristic at every stage of life. You can teach your kids to imbibe the quality of self-control in every phase of their life.
There is a very fine line between being clear about what your child wants and self-control not wanting a thing.
It is good to teach your child to be clear with their wants and desires but at the same time teach them self-control too, as in future they may misuse the money and overspend for the needs that they cannot control.
You can teach your child this concept by giving a regular allowance to them, which may help them save and spend at the same time as per their understanding.
5. Needs vs. wants
There is a startling difference between needs and wants. Many adults are confused about relating to the concept. If you want your child to be clear, teach them this concept at an early age.
Tell them there is a difference between their actual needs and what they really want. For example, if there are 2 sets of crayons by 2 different companies.
The higher the price, the fancier is the packing. You can explain to your child with the same example that the cheaper one can fulfil the need as the purpose remains the same for the colouring whereas the expensive one may fulfil the want.
Needs can be fulfilled by limited money, but wants cannot be satiated even with a huge amount of money. Many people borrow loans to fulfil their wants irrespective of their low paying capacity.
For example, if you wish to buy a car, you can either save money or take out Car finance for bad credit from a direct lender.
These loans help you to buy your car in no time. But the decision is solely yours. You have to analyze your finances and then decide on the borrowing.
Whatever you decide will be replicated by your child. Therefore, make sure to decide wisely. This makes them stuck in a financial quagmire that adds up to stress and worry in life.
Hence, it is essential to make your children understand these concepts to have a happy and peaceful life.
Conclusion
It is essential to make your children understand the importance of money. If you do not do so, they may not be able to take care of their finances in the long run. Hence you can follow the above-mentioned ways to display the significance of financial management.
