It is true that as parents, you would like to see your children grow up to be prosperous and financially savvy. So, of all the good habits and lessons you teach to your kids, one of the most important is good financial behaviour coupled with money managing habits.

In simple words, money management is about learning how to earn, spend, save, borrow and repay money responsibly. It is an ongoing process that helps an individual make sensible decisions about money and achieve his/her goals in the future. This is why it becomes imperative that your child start learning about money management at an early age to get them started in the right direction.

So, how do you start?

As a matter of fact, kids learn by watching how you deal with money. Hence, one of the best ways to teach financial management tricks or skills to your kid is by modeling responsible attitudes to money. For instance, when you showcase good spending and saving habits, those will create an influence on your child as well.

So, for instance, you can pick situations to impart important money lessons. Like, taking their help when you are making a monthly budget, or telling them how to set aside money for emergencies, or setting savings goals. All in all, getting your kid involved in household finances is a good way to help them gain an understanding of managing money.

Encouraging Responsible Financial Management

As your kid gets older, it’s a good idea to give him/her a bit of control over their own money and responsibility for how they spend it. You can continuously guide them. You can chalk out some clear guidelines about using money with your kid – for instance, discuss how much can go into spending, savings, and donating. This in turn will help them inculcate lifelong money management skills and lessons.

Saving Money

Most importantly, you will also have to guide your kid towards saving money, rather than spending it all. Always encourage them to save a sum of their pocket money for the future or any emergency. As they grow up, kids also start to think about saving for things they wish to buy. This is when you can assist them to set short-term and long-term savings goals. These will essentially be helpful for them in developing responsible financial habits. They will also learn to differentiate between wants and needs, eventually driving them to save up for the most important thing.

Understanding Digital Money

Today’s kids and teens are growing up in a world that is instantaneously connected via digitization. As a result, a large number of digital transactions take place instead of just physical cash or coins. In such a scenario, it becomes key that your kids have the knowledge of digital money or online transactions. They are also required to be aware of how to spend, save, or transfer money using digital fintech platforms. At the same time, tell them the difference between spending online using a debit or credit card. Lastly, it’s essential that they keep a track of their account balance including spending, saving, and donating.

Learning From Mistakes

While learning financial habits or money management skills, it is also true that your kid will make some mistakes. Whether it’s spending a week’s allowance in just three days, or spending a lot on something that doesn’t seem so good after they have bought it. They are bound to make a few mistakes or a wrong choice in investment. But, what’s vital is that they learn from those mistakes and ensure not to repeat them.

Conclusion

In a nutshell, it’s important that your kid understands money, the cost of ownership, or why they are making an investment. This is only possible when they develop different money management skills. These will not only help them become financially independent but your kids will be able to make prudent decisions and execute wise practices as they grow up.

(By Ankit Gera, co-founder of Junio)