How to Introduce Financial Planning to Your Children?
As adults, many of us have a poor knowledge of money and hence have a difficult relationship with it. This connection is frequently characterized by our earliest experiences with money.
As children, we are impacted by our family's financial situation, our parents' and family members' saving, spending, and investment habits, as well as their attitude and behavior toward money. It is thus prudent for parents to have a formal and defined strategy when exposing their children to money and how to handle it in order to lead a decent life.
So, what is the appropriate age to begin exposing children to the notion of money, and how should it be done? Here we present how to introduce financial planning to your children or a few ideas for teaching children about money from an early age.
Ages 2 – 4:
Around the age of two, children begin noticing and recording information. Play shopping games with them to introduce children to money. Allow them to hand over the cash to the cashier and take the change when buying. Encourage children to recognize numerals on currency and coins if they started with numbers. Give them a few rupees and assist them in purchasing and paying for something for themselves.
Ages 5 - 7:
Encourage your children to work. Incentivize them to learn new things, adopt healthy habits and behaviors, assist at home, and motivate them when they perform well. Assist them in creating a piggybank or savings box. Teach children to save their wages, to keep the box safe, to keep track of their funds, and to check on a regular basis. Set a goal for your youngster to buy anything, such as a toy, book, or outfit. Make sure that this aim is not too tough to reach, or else the youngster may lose interest.
Ages 8 - 10:
At this age, the child's want list generally becomes longer as they begin to covet what their peers have. This is the moment to teach children the distinction between desires and necessities. Tell them that although you would spend on their necessities, they would have to spend on their desires. They will learn to make judgments about the item on their list they want to work on. It will also improve their capacity to postpone gratification.
Ages 10 - 12:
Begin to include your youngster in financial choices. Bring them shopping. Share your shopping budget with them, and then when you're out shopping, keep talking about what has to be purchased first and what can wait until the next shopping trip. Discuss which offers can help you save money, which things must be of a certain brand, and which items can be generic. And if you manage to save any money, use it to enjoy treat with your child.
Ages 12 - 14:
Open a bank account for them. Several banks provide children's accounts that include checkbooks, debit cards, and online banking passwords. This not only entertains the children but also teaches them about banking. Provide information on how to earn interest on their savings and the idea of compound interest, as well as how to assist their funds grow by not withdrawing from the account. Make careful to teach children about safe and secure banking, both online and offline.
Ages 15 – 18:
Encourage the kids to learn more about personal finance. Involve them in your financial planning, tell them about your different investments and assets. Take their inputs on what new investments can be made or what old investments can be revised to achieve short-term and long-term goals. Assign them the task to make a half-yearly report that provides an update on the family’s investment and assets.
Financial skills \are of much importance to navigate through life. As parents and adults, it is our duty to instil financial ethics and behaviour in our children so that they can lead a financially secure life and be Future Fearless.