Resumo de Children's Money Awareness

We, as parents, teach our children a lot about good manners, human values, morals & ethics, social etiquette etc. 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 is a part and parcel of our lives. And just as there is good and bad behavior, 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. The good financial habits need to be inculcated from childhood. Moreover, today children are big spenders? Games, CDs, movies, dresses, cosmetics etc. Hence, it is important that they learn to appreciate the value of money. 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 to compare prices. Give them coins and notes to get a feel of money. Start early. Even children of 3-4 years can differentiate amongst coins. 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. It is, however, important that the decision, whether to spend or save or on which items to spend, should entirely be of the child. This will get the child more interested and also feel responsible. Let them make mistakes. This is the best way to learn. Of course you can guide by giving pros and cons of various options and how to make good choices. However, in certain extreme cases, say he wants to buy a cigarette from his allowance, you can stop him. But be sure to explain the reason for doing so. Since the purpose of the allowance is to teach financial discipline, do not give any extra allowance or if he has exhausted his allowance do not give any advance. Similarly, on your part, pay the allowance on time. Do not delay or make them remind you. 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. Deposit the amount saved in the piggy bank into their account. Take the child to the bank and let them see and enjoy how the money grows. Let your child keep the bank statements, passbook and chequebook. This will help them to learn to get organised and keep proper records. 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. Over time, he will learn to distinguish between his `wants' and `neds'. Remember that you would be doing a great disservice to your child if you meet all their demands. Together with saving habits, budgeting will help him to plan for his future purchases, which may not be possible in a single allowance. He will also start appreciating the fact that money resources are not infinite and need to be judiciously used. It will also cut down the impulse buying and wasteful expenditure. 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. Your attitudes & beliefs about money and your behaviour in money situations will shape a lot of your child's money-attitude. Therefore, make sure that your lessons to your child are consistent with your own actions.

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