Contributed by Marie Nelson
As a responsible parent, teaching your kids about the ways of effective financial planning remains crucial. Management of personal finance is a combination of art and science that cannot be mastered in a single day. If you want to make sure that your kids are duly aware of the need for frugality, you should start training them from today so that they can avoid making unwise monetary decisions later in life. Here is a list of few tips that you should use in order to help your child improve his financial literacy.
1) Use Piggy Banks: It is advisable to inculcate the values of good finance management in your child when he is very young, for instance, when he is four or five years. A piggy bank can become a major tool in this process. At the age of three or four, you perhaps cannot expect your child to understand even the basic concepts of financial planning like the need for starting early in life and saving for future. But if you make sure that you are giving him even a dollar per day and asking him to deposit in the piggy bank then it will be easier for you to teach him the values of saving money. Moreover piggy banks are extremely fun ways of saving money for a child. The thrill of unraveling their hard earned treasure to make a small purchase can turn out to be a real exciting proposition for your child.
2) Ask Your Child to Start Early: As your child grows a bit older then you should at least start discussing the fundamentals of financial planning. Educate him on setting up short and long term financial goals. For instance, tell him that he should approach different ways of saving for a video game and for college. Ask your child to start saving from college now only. He can start off by saving up a little money every month for contributing to his expenses for higher studies.
3) Make Sure that a Systematic Approach is Adopted: If you do not adopt a systematic approach while aiding your child with his financial planning, then you he might find it difficult to manage his money. You should open a savings account for your child as soon as you are allowed to do so. Take your child to the bank at least once in a month and make a deposit. Ask your child to sit down with you when you are checking out the bank statement.
4) Set Financial Goals for Your Kid: When the child is too young to understand the need for financial planning it would be a little incongruous to bombard him with suggestions on money management. Set financial goals instead. Ask him to save up for a toy first then for a short holiday trip and so on.
5) Teaching the Nuances of Budgeting is Important: Please make sure that your kid learns about budgeting. He can learn it in a lot of ways. Ask him to note down his savings and expenses on a regular basis. Try to monitor his financial records at times. Ask him to bring down the expenses for a particular month if he had overspent in the previous month.
6) Take help of books on finance: Always ask him to refer to financial books if he decides to take a loan or insurance. There are a host of useful books that can guide you ably on matters like how to get a loan,what are the types of insurance available in the market etc. Tell him that it is not proper to make an investment without doing proper research.
Go through the tips mentioned above to help your child learn money management skills effectively. You might have to show him the way initially, but be rest assured that as he grows old, he will be better equipped to handle monetary concerns.
Marie Nelson is a renowned web content writer, who is well versed with a range of aspects of World Economy. She has appeared on famous financial portals voicing her concerns regarding the recent economic downturn.
