7 things that parents should teach kids about money

These days, parents tend to give their children all that they desire. In contrast to the generation of the 80’s, wherein every penny counted, today’s generation is completely opposite of the former. The income earning capacity of people is way better, and with this kind of income, parents allow their children to have the best of everything.  This in turn, leads the kids to become more demanding and they fail to understand the value of money. This has to be taught by parents to their children from a very young age, say 3-4 years. If not, the kid will only learn to spend lavishly as he/she grows up. IT brings about a sense of discipline in children which is a very important trait that has to be inculcated in every child.  Here are seven things that parents must teach their children about money: 

1. There is no such thing as a money tree! 

These days, with ATMs all over the place, children feel that all you need to do to get money is go to the ATM/Bank and you can get all the money you want. Also, when parents need money, they go to the ATM and withdraw the cash, which makes the child assume that it is quite easy to get money as and when required. Children have to be taught how money is earned by securing a job and working hard and banks are just places which keep your money safe. 

2. Getting paid for work 

Children have to be taught at a very young age that you get money for work done. The allowances given to children for little jobs done like putting up a small stall of lemonade or having a garage sale – where they can sell their old or unused toys and earn some money. You can also teach them how to calculate the profit that they make on this. Giving allowances for household chores like keeping their toys in place, keeping their room clean, etc., is not recommended as these are basic activities which all do as part of daily life. This little step will enable the child to develop a sense of understanding on how money is earned and earning money requires intelligence and hard work. 

3. Saving  

This is something that every parent must inculcate in their children – to save and invest their money at an early age. Parents often give their children some pocket money for small tasks, or as gifts on certain occasions. During this time, children must also be advised on how to save a portion of their earnings or pocket money. Inculcating the quality of saving will definitely help your child in years to come and will ensure that they do not splurge all their income unnecessarily. 

4. Differentiating between Needs and Wants

Children need to be taught how to differentiate between their needs and wants. Needs are the basic requirements in life like food, clothing and shelter. Wants go beyond your basic necessities like gadgets, expensive jewelry, etc. Splurging on your wants is alright once in a while, however, saving up and having a budget for it will help. This leads to more discipline in life. This simple difference must be taught to children as it helps them prioritize their requirements and helps them save their money for something they really require. 

5. Maintaining a Budget 

As an adult, we understand how maintaining a budget for the month, helps us sort out our incomes and expenses. The same things have to be passed on to your children too. As children move into teenagers and adulthood, they must be taught how to budget and how to maintain a monthly tab of their incomes and expenses. This helps them take care of all their requirements in the budget they have fixed for that month. This small advice will help your child as he/she grows and has their own family. 

6. Smart Shopping

 Money can buy all that you want. However, smart shopping is something that children must learn early, with the ever-increasing inflation! Children learn by following their parents. Teach your child to check out the sales, discounts and coupons as well as cashbacks and teach them how they can buy their necessary things and also save some money. Learning to shop for their essentials during sales or by using coupons, or even purchasing via cashback sites, etc., are simple ways wherein the kids can shop as well as save. 

7. Creating a Wishlist

 It is a great idea to teach your child to create a wish list wherein they can rank the items as per their priority and need. This teaches the child to save money and prioritize on their needs and purchase what is important. It also helps them to avoid the need to spend on unnecessary objects and spend on what is important. 

These are tips which might appear to play a very small part in your child`s life. However, these same tips have helped us, as individuals, to manage our income, expenses and live a life without many problems. These simple tips will inculcate values of saving, sharing and discipline in your children at a young age, which will in turn, help them in the long run. Teaching them to budget, shop smartly and wisely, will help your child learn how to earn and save. So, it is high time to start practicing and preaching! 

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Yonita is the pillar of Client servicing at Moneyfront. She has worked with Citibank for over 25 years in operations and client servicing. In her stint with Citi, she has managed large service setups and her rich experience of banking spans across managing clients, operations, audits and compliance matters. She epitomises ‘client excellence’ in the true spirit of the word. Her motto and single-minded focus is to make sure every client is a happy client.