Teaching your child value for money is an important aspect of parenting. Though it is usually said that money isn’t good company for any of us, its importance cannot be understated. The quality of life we lead has a lot to do with our understanding of money matters and will dictate how we spend and save those currency notes. So while you try your best to teach your child ethics and other principles of life also try and instil a firm understanding of financial matters too. Remember that important lessons in financial management that could ensure better living standards during his adult life, are taught at home and not at any business school. Here is what you can do to help your child value money:
Encourage the reuse and recycle principle: One parenting mistake that we all make is to mindlessly splurge on our children. A little thought over this will make you realise that compulsive buying for children is done to satisfy our own underlying desires, rather than meeting our children’s needs. Buying new clothes and toys for your baby is all fine, but as your child grows it’s imperative that you be cautious about your spending habits, as your child will now be taking cues from you.
To start with, teach him the basic principles of reuse and recycle from an early age. Instead of buying all those fancy musical toys and expensive clothes for your child, take your toddler to a toy library and pick up things that he can play with for a fortnight and return it after the stipulated time. Make sure you bring your child along with you to return the toys too. Never hide the toys from him when it’s time to return them. In this way he will know the basic difference between possession and sharing. He would also learn that shared toys bring the same joys and pleasures of play, as the toys he owns. This is your first step in teaching him to reduce expenses for things that aren’t an absolute necessity and to look for options to make choices in a more fulfilling and fun way. Follow the same rules for books and other items too. If there are elder siblings in the family, make sure that your little one learns to share things with his siblings too.
Teach financial responsibility: Help your child take responsibility for money from a very early age. Even if you think that money shouldn’t be handed out to children, remember they won’t know how to respect money and value it if they are never given the chance to handle finances. When your child is around 10, start with the pocket money system. Doling out around Rs 20 a week should serve the purpose. Make it clear to your child however, that he needs to save enough from this allowance to get things for himself if they are luxuries, as you will only provide him with the necessities.
Teach the difference between luxury and necessity: As your child grows, his needs and thoughts will change and that includes financial opinions too. Though you might have to increase his allowance with every passing year, make sure you don’t go off track. Be judgmental about his financial demands. Early exposure to money can be destructive if not supervised adequately. If your child demands an increase in the allowance or more money to buy things that aren’t a necessity, have clear and firm conversations with him. Doling out advice doesn’t always help, so have rational conversations and talk to your child instead. Reason out why buying an iPad isn’t as necessary as buying a washing machine for the family and so you won’t do it. Make concessions occasionally, maybe to reward certain good behaviour like good grades, but be consistent and firm. If you remain firm with your decisions this will help him make informed choices later in life, no matter how upset or mad he might be at you at the moment or for days at a stretch.
Keep an expense diary: With increases in allowance there would be an increase in expenditure too; ask your child to maintain an expense diary. Keeping a tab of his own expenses will give him a sense of control over his money and help him spend every penny wisely. Start this habit as early as you can. If your child knows how to do the calculations and finish his math homework all alone, preparing an expense sheet isn’t a difficult task for him. If your child doesn’t have the best maths skills, this should help motivate him and at the very least should give him some practice! Express your appreciation and pride whenever you see that he has saved enough from his pocket money. This will surely serve as a morale booster.
Encourage summer jobs: There are a lot of options for teenagers to earn money during their vacations. Try not to judge the job he picks or the pennies he earns. This is important as this is the age when he would learn that money isn’t earned easily; the other benefit is that he would also learn the basics of work ethics and develop a respect for hard work. If he is ready to serve at a food joint or tutor other kids, make it a point to support the activity and his initiative.
Include in financial decisions: When you go shopping, take your child along with you. Teach him how you meticulously do the calculations to save some money. Help your child understand how marketing gimmicks work and why you don’t fall for them. Also show him how you keep a tab on your expenses without filling your cart mindlessly and how you budget expenses for the whole month with your careful planning and choices. Share your personal expense sheet with him and show how you achieve your target of saving, provided you practise those habits yourself.
Lead by example: Kids only learn through example, so be cautious with your spending habits. If you have no control over your money, don’t expect your child to understand the concept of saving from you.