It is essential to teach your child “Value of Money.” Before knowing how to inculcate good habits in children, we must know a little about the history of money.
If we study the economic conditions of ancient civilized society, we will come to know that people used to exchange goods and services for other products and services in return.
This system is known as a barter system.
This practice continued until the money was not invented.
This exchange of goods or money is only meant to meet the needs of people in any civilised society.
The basic needs of people are food, shelter, education and medical.
From ancient society to modern society, there has been a significant increase in human needs.
In the era of advanced technology; everyone is aware of various things around the world.
As a result, the need for money is not limited to, meeting basic needs, but people have become competitive and ambitious. So, it has become very necessary to teach our children the “Value of Money”.
They have ambitions and desires to achieve big things.
Whether it is higher education, assets, luxury items, or medical assistance, we require money for everything.
Money has a significant effect on our living standards.
As such the necessity of money has grown very high and it has become an essential part of human civilisation.
The most valuable gift that you can give your children is not money; it is the ability to think positively. The money will soon be gone, but the ability to think positively will go on to help your children be a success throughout their lives.
Therefore, it is also an essential aspect of teaching our children the “Value of Money” to live a secure and comfortable life.
Knowing the “Value of Money”, children will focus on their education and career.
Parents and teachers can do a lot to make the children aware of this aspect.
Here are a few tips that parents can follow to Teach their child “Value of Money”.
First- Get a piggy bank for small kids to teach child value of money
Introducing a piggy bank to young children is a simple way to teach them the basics of saving. Children can collect money they receive as gifts or allowances in the piggy bank. When the piggy bank is full, parents can involve their child in the process of counting and taking the money to the market. This hands-on experience of saving and using their saved money to buy something they want helps children understand the value of money, delayed gratification, and the concept of saving for a goal.
Imagine you give your 5-year-old child, Kaya, a piggy bank. Whenever Maya receives money as a gift from relatives or completes small chores around the house, she puts the money into her piggy bank. Over time, the piggy bank fills up with coins and bills. When it’s full, you take Kaya to a toy store. You help her count the money and explain that this is the money she saved. Kaya is excited to use her saved money to buy a toy she’s been wanting. This experience teaches Kaya the value of saving for something special.
Second– open a Bank Account to teach value of money
When the child grows up and can have a bank account, then take your child to the bank to open a bank account. Explain to him/her how the money will grow in the bank. In the process of opening a bank account, include the child and explain the things related to the bank according to his age.
This teaches children about the importance of keeping their money safe and watching it grow over time due to interest. The process of opening a bank account also offers parents the opportunity to explain banking terms and concepts in a manner that is suitable for their child’s age.
For Example- When your child, Arjun, turns 10, you decide to take him to the bank to open his first savings account. You explain to Arjun that this is a safe place to keep his money, and the bank will help his money grow over time. The bank staff simplifies the concept by showing him how his savings will earn interest. Arjun learns that money can grow on its own when saved wisely.
Third, Give the children a monthly allowance-
Give them some monthly allowance for their expenses. Allow them to buy a few things of their choice. Appreciate their decisions and also guide them on how they can get a good thing with lesser expenditure. Encouraging responsible spending and discussing the value of money in relation to the items they want to purchase helps children develop financial awareness. This will help them to develop a sense of responsibility for spending money.
Fourth, Teach them shopping-
Whenever you go shopping, take your child along and show him/her how things should be bought. Give them a little money to buy a product that is included in the shopping list. Encourage your child to find different brands of that product and see the price label of each brand. Explain to him how to buy a good product at a low price. Tell him how much money you can save with this method and buy extra things.
Let us say, while shopping for groceries, you take your 8-year-old son, Rohan, along. You give him a small amount of money and ask him to pick a specific item from the list, like cereal. Rohan compares prices and sizes, eventually choosing a cereal that offers a good balance of quality and value. You praise his decision and explain how smart shopping can save money.
Children learn most from their parents. Hence, parents should know well about saving and investing money. They can teach their children about the value of money only if they also understand the value of money. It is advisable for parents to learn about investment from a certified financial planner.
For example- Your children, Ayesha and Karan, often see you comparing prices, saving for vacations, and investing wisely. One day, Ayesha asks you about it, and you explain that these actions help secure your family’s future. Seeing your responsible financial habits encourages Ayesha and Karan to learn and adopt similar practices.
Sixth, Show them your workplace to teach child value of money-
To show your workplace whenever there is a chance, take the kids to your workplace and tell them that you need to work there to earn money. Taking children to your workplace and explaining that you work to earn money helps them understand the connection between work and income. This concept instills the value of hard work and earning, building a foundation for a healthy work ethic.
It is to teach your child the “Value of Money”.
Example- During the weekend, you take your kids to your office for a brief visit. You explain that you work here to earn money, which allows the family to have a comfortable life. This connects the idea of work and earning, helping your kids understand why adults go to work.
Seventh, Do not fulfill all demands-
It should not be every time that the parents need to fulfill all the demands of children. Parents should explain why they cannot meet all the expenses. Parents should explain to their children that not every desire can be immediately fulfilled. This teaches children about limitations, delayed gratification, and the importance of understanding financial constraints. Communicating openly about the family’s financial choices helps children learn to make thoughtful requests.
Suppose your child, Rahul, asks for a new video game console. So instead of instantly buying it, you explain that sometimes you need to make careful choices due to budget considerations. And you explain to the children how saving up for bigger items can be more rewarding in the long run.
Eighth – Teach Them to Budget:
Teaching children about budgeting early on prepares them for responsible financial management in the future. Encourage them to create budgets for their expenses and explain how overspending can lead to financial difficulties. This skill helps children avoid debt and make sound financial decisions as they grow up.
Let’s say, your teenager, Neha, receives a monthly allowance for personal expenses. You encourage Neha to create a budget, allocating portions of her allowance for different categories like entertainment, snacks, and savings. Neha learns to manage her money wisely within her budget limits.
Ninth – Teach Them the Importance of Saving:
By discussing the significance of saving money with children for future goals they learn to think the concept of long-term expenditure. Setting achievable savings goals and rewarding them for reaching those goals reinforces the concept of delayed gratification and financial planning.
You share with your kids, Aditya and Priya, your plans to save for a family vacation and explain that saving consistently allows you to achieve meaningful goals. You involve them in setting up a family savings goal and show how contributions over time make a significant impact.
Tenth – Teach Them the Importance of Giving Back:
Instill a sense of empathy and community responsibility by teaching children about the importance of giving to those in need. Encourage them to donate a portion of their money to charity or engage in acts of kindness. This habit fosters compassion and helps children understand that money can also be a tool for positive impact.
As a family, you decide to donate a portion of your monthly budget to a local charity. You explain to your children, Nikhil and Alisha, that giving back helps those in need. Nikhil and Alisha eagerly contribute some of their allowances to the family donation, fostering a sense of empathy and community involvement.
By incorporating these practices into your child’s upbringing, you can help them develop a strong foundation in financial literacy and responsibility that will serve them well throughout their lives.
Each example demonstrates how you can teach children about money using practical experiences and discussions that align with their developmental stages. By applying these principles in your everyday interactions, you help your children develop strong financial skills and values that will serve them well in the future.
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