With changing times, parenting styles and even the priorities in life keep changing. But, no matter how significant these changes are, one thing remains constant – as parents, you want to give your kids the best life possible. From teaching them how to tie their shoelaces to empowering them with good education, there is no stone that parents leave unturned.
But there is one lesson in life that many parents miss out on – money. You would agree that a lesson in handling money and saving is going to impact your child’s life significantly. While they say money can’t buy happiness, for the rest of everything, you need money. Be it buying new clothes, going for higher education, eating, traveling, etc., you name it, and there’s money involved.
According to a recent study, almost 50% of parents agree that they missed essential lessons on financial planning during their childhood. But at the same time, nearly the same percentage of kids said they are eager to get financial tips and information from their parents.
Even if you don’t divulge financial education, children will still learn it at some point or the other. It is best if they start early and under the guidance of their parents and teachers. At The Navyandhra School, one of the leading schools in Gurgaon, we understand the importance of teaching our students the value of money and impart this knowledge from early stages through our innovative and practical learning framework.
So today, in this blog, we will discuss some effortless and impactful ways of teaching kids about financial planning and its benefits. Read on.
Money Doesn’t Grow on Trees – Explain Them the Source of Money
The first lesson in any financial education is to help kids understand what the primary source of earning money is. Only saying that money doesn’t grow on trees is not enough! You have to help them understand the concept of how you (and in the future, they) earn it.
Giving them small chores and paying them in real or even imaginary token money is a good start. They can later use this token to get some favors from you like that new toy they want or buying a present for their best friend’s birthday! You can start with small amounts (5 tokens for the new toy or 20 tokens for a new dress etc.) and build up the value with time.
Even if it sounds cruel to your loving parent-ears, this exercise is one of the best ways to prepare kids for the real world where nothing is free. Being one of the best schools in Gurgaon, we, at The Navyandhra School, use interactive lessons right from early classes to explain to the kids the connection between jobs and money to help them understand where the money comes from. It sets their expectations right in terms of their needs and how they have to work hard to earn money to fulfill them.
Giving, Spending, and Saving Money – Clarify the Three Pillars of Financial Planning
If you think about it, there are only three ways you can use money – you either give it to help others in some way, spend it on things or service, or save it for later use. Once your kid understands where the money comes from, the next logical thing to do is to explain these three financial planning pillars.
Of the three, it is essential to teach children the right way and the importance of giving money to help others. Organizing a small charitable event on their birthdays, where children chime a part of the charitable fund, is a great way to instill the sense of helping others.
Next is spending. When children use their tokens or pocket money to buy things for themselves, they learn the basics of spending. The critical learning takeaway is that once they spend their money on something, it is gone for good unless they earn it again by doing jobs. Leaning the true meaning of spending on commodities helps them distinguish between needs and wants. This distinction is something even a lot of adults don’t master until very late in life.
The third is saving, the most critical aspect of financial planning you should teach your child. Living paycheck to paycheck without any contingency plan is one of the most common vices in today’s consumer-centric world. Taking debts that are difficult to repay is something you should discourage your children from indulging in.
Saving is a habit that is extremely difficult to establish, even in most adults. The sooner kids get exposure and tips on the matter, the better is their future. Piggy banks are an excellent way to inculcate this habit. At this stage, you can also introduce the kids to the benefits of getting savings interest by doubling their savings if they reach a certain amount.
Once your child understands the difference between giving, spending, and saving money, they would be in a better position to handle their finances upon growing up. If you give pocket money or any form of allowance to your kids, encourage them to plan and segregate that fund under these three heads and stick to it till the next allowance. You’d be surprised how similar this practice is to what you do every month!
Money is surely a tricky topic for most parents to discuss with their kids. But, not giving them a lesson in the value of money is one of the worst things in the long run. We, at The Navyandhra School, positioned among the best schools in Gurgaon, would thus like to urge the parents to follow the above tips right from an early age so that your kids have all the training they need by the time they graduate and handle their finances. Set the base right, and your kids will soon learn to value money better.