Resumo de Make Your Child 'money Smart'

We, as parents, teach our children a lot about good manners, human values, morals and ethics, social etiquette, et cetera. At school also they have subjects such as moral science and value education. But when it comes to teaching about money and finance, we generally feel that they are too young for it.
However, money and finance are a part and parcel of our lives. And just as there is good and bad behaviour, there is also good and bad financial conduct. Therefore, we need to educate our children about the basics of money and money management such as budgeting, saving, investing and not the least spending, from the early years. Good financial habits need to be inculcated from childhood.
The first step is to create awareness about money. We need to explain our child the concept of money. parents go to work to earn money. This money is kept in the banks for safety. When we buy anything from the market such as toys, dresses, food, etc. we have to pay money. Even for going to school we have to pay fees. When we travel say in a taxi or an aeroplane, again we have to pay for the tickets. Taking our child for daily shopping is a good way of making them aware of real life examples. Show them the products and their prices. As they grow, make them compare prices.
Once the child is old enough to understand the concept of money, start giving them a monthly allowance. This will give them a real-life experience about money and buying & selling. Decide beforehand as to what is covered and what excluded.
Encourage saving & open a bank account. Saving is one of the earliest financial lessons to be taught. Get a piggy bank and make it a habit to give your child a coin every day to put in it. When the piggy bank is full, take out all the money. Open a separate bank account for your child with a separate passbook and chequebook.
When you start the monthly allowance, encourage your child to save a portion of the same. As a financial discipline, ask your child to save the money he receives as birthday gifts, etc. It will make savings more fun and motivated if you link it to his buying something big from the accumulated amount say a bicycle, a doll set, playstation, cricket kit, etc. Also set a time deadline. As he grows older, tell him about how the amount in bank earns interest.
Budgeting is another important lesson for the child to learn. The resources will always be less than our desires & wants. Therefore, it is important to learn to prioritise our needs/expenses. To begin with, let them make a budget of the allowance they get. Let him make a list of what he wants and then decide what all is possible within the allowance.
As your child grows up you need to explain the concept of investing and risk. What is the purpose of investing? What are the broad categories of investment options? What kind of risk they carry? What study or research needs to be done before investing? And you could contribute some amount to enable them to make a few actual investment.
Peer group pressure is a situation which every parent encounters. Your child always wants something his/her friend has. However, you may be against it because either you can't afford it or even if you can you don't want to spoil your child by giving him/her everything he/she wants. Alternatively, your child may be better-off amongst his/her friend-circle and may become arrogant and develop superiority complex. Parents need to handle both these situations with patience. The child needs to be explained the situation in detail and inculcated with right & positive behaviour.
Just as we reward good performance at school, it is equally important to reward good financial behaviour. We need to appreciate and applaud our child.
Parents are a role model for their children. They pick-up a lot of habits of their parents. This is true of money-habits too. It will be difficult for you to make your child appreciate the benefits of savings if you yourself are a reckless spender. Yoattitudes and beliefs about money and your behaviour in money situations will shape a lot of your child's money-attitude.
Teaching your child how to handle the financial matters is as important as sending him to school. Good habits, including financial ones, take time to develop. So start as soon as you can. These real-life experiences are one of the best teaching methodologies.
The child is excited and eager to learn. He feels grown-up and gets a sense of self-importance. He picks-up and internalises the lessons much better than bookish knowledge. Good financial management attitude and skills will benefit the child throughout his life. It is one of the best gifts we can give them.

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