Teaching Children To Be Financially Savvy

Money is important in life and needs to be managed well. To make your children well prepared for future, it is very necessary you should make them financially savvy from their childhood itself. You should inculcate habits of money management from early of their life.

Bank account: As a first step towards making your children financially savvy, you can open a bank account for your children and allow them to operate it on their own under your supervision. This will give them basic knowledge of managing their finances. They will get acquainted with basic terms of financial products.

Teach thumb rules: You can teach some basic thumb rules of managing finances to your children in your day-to-day discussions. You can teach them through different games about real life concepts like investing, saving etc in simple terms.

Set example: Children try to imitate their parents, so they follow their parent’s savings and investment patterns. Therefore, you can teach your children to be financially responsible by controlling your spending, having emergency fund and not wasting money on unnecessary things. When parents themselves are careless with money then how they can inculcate savings habits in their children.

Involving children in financial decisions: You can involve your children in your day-to-day money matters. This could be a good learning opportunity for them.

Set goals: Tell your children to set goals and accordingly spend their pocket money in such a way that they can achieve their goals. Children usually get money from their elders on their birthdays or festivals which they put in their piggy bank. When gets accumulated in fairly big sum. You can ask your children to maintain accounts. Ask them to monitor it and involve them while investing it. Parents along with their children can discuss and decide for what goal this money can be used and how much more investments would be needed for achieving the goal. This will teach children about investments, investing for a goal, monitoring investments and an acquaintance with investment instruments.

Give some power to make decisions: As your children grow up little, you can gradually give them limited freedom to make their financial decisions. Allow them to spend their pocket money on their own. They might make some mistakes but it will teach them big lesson for them that they will remember for their whole life.

Ask to contribute: When your children ask for anything expensive, you should ask them to contribute certain money from their savings towards buying it. This will teach children value of money.

Keep them motivated: Overtimes, children might lose interest in saving money. To keep them motivated, you can reward their efforts them in regular intervals. You can reward them for maintaining their accounts well, for regular savings, for learning new things about money etc.

You can help your children to develop money management skills by putting some extra efforts to teach them benefits of being financially savvy.

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