Financial planning is not a chore. It is a habit. And as they say, the best and worst habits are cultivated in childhood. We teach our kids the importance of good manners, hard work, education, etc. Then why not judicious financial planning? Financial planning is not yet a subject that is taught in school, but parents can very well inculcate habits at home that make the kids more aware and responsible with money. Some of the ways in which we can rise financial awareness among our children are as follows:
- Take your kids along on bank visits.
- It is a good idea to let your children accompany you whenever you run weekend errands to the bank. Show them the different counters, and explain them what the cashier does, what the mangers do, how money is deposited or withdrawn, etc.
- Open a savings account for them.
- You can also take it a step ahead by opening up a savings account for them. They can deposit their own money in their account with your help. This will give them a sense of confidence and involvement in money matters.
- Teach them to budget out of pocket money.
- Give your kids a pocket money every month, be it small or big, and let them manage some of their expenses from it. For example, if they go to school by public transport, give them a monthly allowance for it as a part of their pocket money. If they wish to buy their favourite game or go for that popular movie, let them save for it. And make sure they save at least a small part of this money for a longer horizon.
- Try to have money conversations in front of children
- Children learn more from actions than from words. Discussing your own finances and investment plans reinforces a similar behaviour in the children. Instead of making them feel isolated in such ‘adult’ conversations, make them a part of your financial achievements and challenges. Show them how you do your taxes, even if they don’t understand it. However, make sure you get them interested and not bored.
- Invest in children’s schemes:
- There are many schemes especially designed for children investments, such as minor FDs or Sukanya Samriddhi schemes. Some of these also allow children to operate their own accounts after a certain age. Make kids understand their account statements, etc.
- Teach them the importance of savings.
- Let the kids know how you saved up for buying the new bike or car or the new house. Tell them how they can also use that money for better things by saving. Instead of instant gratification of all their demands, let them save up their pocket money to fulfil their wants out of their own savings.
We all want our kids to turn out financially responsible, and the key is to start financial planning as early as possible. Let us start at a young age today, to build a brighter future for them tomorrow!