As a parent, it’s your responsibility to take care of your children and teach them some of the most valuable lessons that can help them live comfortable lives. These include lessons about money management and financial discipline. The top 7 are as follows:
1. The Habit of Saving Money Goes a Long Way
This is easily one of the most basic financial lessons that every parent must teach their children. In fact, it’s better if the children develop the habit of saving money when they are quite young. This way, as they grow older, they will waste less money and save it for important purposes.
2. Various Forms of Financial Products They Can Use
It’s best if your children learn about personal banking from you rather than other sources which may confuse them or misinform them. There are so many things that you can teach them like how credit cards work, why insurance is important, how taxes work, etc. They may not necessarily need to apply this information at the time they receive it, but when the time comes, they will have a general idea about the steps they need to take or the things they need to avoid.
3. It’s Not Easy to Earn Money
It’s only natural if you want your children to enjoy all the basic amenities that you can provide. However, if you are spoiling them by saying yes to all their demands, then it can hurt them in the future. This is because if they are able to get anything they need, like a new bike or video game console, just by asking you, then they won’t understand the value of hard-earned money. This is why it’s best to teach them the value of money in a practical manner. To do that, what you can do is instead of just handing out money, you can ask your children to work for it. For instance, you can ask them to help around the house, take care of some chores, etc. to earn the money.
4. Debt Must be Taken Seriously
If you have older children who are using credit cards, then you should teach them how to use them properly. First of all, they shouldn’t be availing the minimum payment feature which essentially leads to bad money management and increases debt. You should also teach them that credit card bills must be paid on time every month and they can check their credit report to monitor the payments.
5. The Difference Between Wants and Needs
Children have poor judgment about many things. For instance, they don’t understand the difference between the things they absolutely need and the things they just want. However, it’s important that they learn the distinction as that can greatly improve their spending habits.
6. Credit Score Management
This is another lesson that is meant for older children which concerns how to build a good credit score. If the kids are to complete school soon and start college, then building a good credit score can ensure that they are able to get an education loan easily. Plus, they can prevent the possibility of low CIBIL score which can make it difficult to get good interest rates and easier repayment terms, etc.
7. It’s Wise to Make Informed Investments
There are various types of risk-free schemes in which your children can start investing at a young age. For instance, there are recurring deposit accounts, stocks (you can invest on your child’s behalf), etc. By making investments at a young age, your children can reap the benefits when they go to college and need money for expensive things like a car or a laptop.
Money is a tricky subject but the more someone understands it, the easier it becomes to make key financial decisions. Thus, it’s wise to assume your responsibility in this department as a parent and teach your children the basics of finance management and planning. They may not necessarily be open to this idea and may even find it boring. However, they will surely thank you when they will grow older and realize the importance of these lessons.
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