DR. PALLAVI AHUJA
Developing financial prudence in children at a small age is an important task for parents. Teaching your child about money management can set them up for success in the future and help them avoid common financial pitfalls. We at the Jagannath International Management School, one of the top b schools in Delhi, believe that money management has a very important role to play for MBA and PGDM candidates. They need to be financially educated which is an important skill to excel at. Here are some tips on how to introduce financial prudence into your children at a young age:
- Start early: It’s important to start teaching children about money management from a young age. Talk to them about the value of money, how to save, and the dissimilarity between requirements and wishes. It’s never too early to start schooling your child about money. Even young children can learn basic concepts such as earning, spending, saving, and sharing. Use everyday opportunity to kick off conversations about money, such as when you go grocery shopping or pay bills.
- Role model the children: Children learn best by watching what you do, so make sure you are modeling good financial habits. Show them how you plan, save, and make smart financial choice. Avoid making impulse purchases or using credit cards excessively in front of your child.
- Teach them the value of money: Help your child appreciate the value of money by encouraging them to make their own money through household tasks or a part-time job. This will help them understand and be familiar with their parents’ efforts.
- Basics are the key: Teach children how to plan, save, and expend money judiciously. Explain concepts such as interest, investment, and credit in simple terms that they can understand.
- Use true-to-life examples: Help children understand financial concepts by giving them real-life examples. For example, you could involve them in budgeting for a family vacation or setting up a savings account for a big purchase.
- Allow them to make mistakes: It’s important for children to discover from their faults when it comes to money. Allow them to make small financial judgments on their own, and help them understand.
- Hands-on experience in Bank: Try to give them a practical exposure about the banks. Take them along for a bank visit. Educate them regarding a bank statement, savings accounts, depositing money etc.
- Make it playful: An important tool to develop thriftiness is by making it playful so kids find it full of fun and it adds on to their learning also. To name a few, Payday, monopoly, Business are the best games for teaching them money management. These games enable them to make property purchases, borrow money, and incur expenses and budget.
- Open a joint bank account: Though kids save money only in the piggy bank, yet as they grow, we can choose to open a joint bank account and deposit some money, so that they feel a sense of ownership.
- Set savings Goals: It is imperative that the children learn the importance of saving today to use tomorrow. Enable them to identify their future needs like a toy, a dress or a gadget. This helps them learn that saving money over a period of time can help them accomplish their goals in future.
- Smart Spending Choices: Teach them how to spend wisely by comparing the prices before deciding to buy. Guide them to make a priority list to spend prudently. This exercise inculcates responsible spending patterns.
- Allot Monthly pocket money and review regularly: Give them some amount of money on a monthly basis and also give them the freedom to spend that money. They should be able to choose what to buy and how much to spend. You can also keep increasing the amount with time and give some extra incentives for shouldering some responsibilities or on festivals.
- Make them record and match: The children should be asked to remember to jot down all the expenses they make during the allotted period of time. They should be able to match the total expenses with a allotted allowances.
Conclusion
Inculcating a financial sense in children is an investment in their future security. Money education will make them empowered and they become more confident in handling the financial complexities. Financial education has no limits, it is a continuous process. At Jagannath International Management School, New Delhi, we carry out activities to give the students, a hands-on practice on managing Finances. We train them to grind their financial decision making ability and build their overall confidence to help them develop as successful future managers.
