By Javed Tapia
Parents’ Day is celebrated in June to appreciate the commitment made by parents to raise well-behaved and responsible children. While education, healthcare and co-curricular activities assume great importance, financial prudence among children is often ignored. It is not taught in schools and parents do not often take an active interest in inculcating “good money habits”. A lot of parents have told us that developing money habits in children is important, but they do not find the time for it. Interestingly, many of these parents have also conveyed that they do not know where and how to begin.
Here, I would like to share a few steps that will help you to enable your children to embark on a journey of good money habits and financial prudence.
Start with responsible freedom
Children yearn to independently manage the money they have in hand. For them, the idea of independently managing a small amount is euphoric. Start by giving them a small allowance for the month and ask them to manage within it. When a parent gives the child an allowance for a day, week or even a month, she also gives them the freedom to make their own money decisions, make affordable mistakes and practice the art of money management.
Do you think it is time consuming? Several smart money management solutions (mobile app and prepaid card-based solutions) for children are readily available. You can install them on your smartphone and get going in an instant.
Set and track budgets
Once you have given an allowance, it is important to supervise how children are spending it. You can also set guidelines to enable children to take their own money decisions but refrain from overspending.
What better guidelines than creating budgets for them. By setting weekly or monthly budgets for your children and tracking it against their expenses, parents can get enough data to share informed insights on managing money smartly.
Let them “earn it” and realise its value
How about setting goals for your children and rewarding them on successful attainment? It is exciting and enriching for children to take on challenges such as getting a good grade in an examination, learning to swim within a month, etc. How about giving them small monetary rewards for such achievements? This will enable children to value the money earned by them and it often leads to prudent spending.
Maximising the value of money in hand
As a parent, do you encourage your child to scout for the best and most cost-effective option when they want to buy something? Inculcating this habit early enables them to use money wisely. Encourage children to scout for better options, negotiate with the seller and get more value from the money they have. This enables children to use their allowances efficiently. It is a very important milestone in the journey towards financial prudence.
Save for a dream purchase
Encourage your children to save for their dream purchase. Let’s assume it is a laptop tablet hybrid. Parents can throw a “six-month” saving challenge wherein the child would have to save an amount from her stipulated allowance for the subsequent six months. If the child is successful in attaining it, reward her with the dream purchase.
As parents, let’s leverage the digital transformation wave to create a financially prudent new generation. With digital money management solutions, all it will require is a few minutes of your time every day. However, these few minutes might turn out to be the best investment towards securing the financial future of your children.
(The writer is Founder, Slonkit.)