Make your kids money-smart

Javed Tapia offers tips to help your child become financially prudent

Parents don many hats for their children — friend, advisor, guide and mentor. They understand the importance of inculcating healthy habits in their children. And, one such healthy habit is learning how to manage money smartly. Although parents have an understanding that their children need to learn money management, there is often confusion as to how to go about this. To help parents in this process, below are a series of steps that they can implement to enable children to have fun while managing money in the most convenient way possible using digital channels:

Let your children earn the allowances

It’s important to give children some money to manage. However, ensure that they have earned it. Offer your children an allowance on completion of a set of household chores.

Set goals for your children

How about setting goals for your children and rewarding them on successful attainment? Throw in small challenges to get your children excited about earning the money that she/he would manage. The goal is usually an activity that consumes a significant amount of time. It could be scoring good grades in exams or learning a new language. If the child is rewarded with monetary incentives for attaining these goals, they will value the money they earn and translate it into meaningful spends.

Advocate thoughtful spending

Encourage your children to be thoughtful buyers. Irrespective of the cost of the purchase, urge your children to scout for better options, negotiate with the seller and get more value for their money. This enables children to use their allowances in a better manner. By doing this consistently, they can develop a habit of valuing money and using it judiciously.

Cultivate the habit of saving

Take your children shopping and show them one lower-priced and one higher-priced toy. Explain that in order to buy the more expensive item, they will have to save their allowances.

Introduce them to budgeting

Once they understand the benefits of saving and start doing the same, teach them budgeting. Guide your children to document their expenses and ask them to set monthly budgets. If needed, help them categorise their expenses, put a limit on spends in each category and monitor their expenses across categories.

Set a good example

Ultimately, you’re the role model for your children. If you’re spending mindfully as per your needs, the same will be understood by your children and they are highly likely to follow in your footsteps.

(The author is founder, Slonkit)