Children learn their money management lessons through experience—whether it is spending at a school canteen or store next door or raising funds for a charity.
Parents can teach their children about money management from a young age in many different ways, which could be fun yet essential for inculcating healthy financial habits in them. For example, the lessons could be imparted during a fun-filled trip to the market, in a formal setting like a classroom, or at home.
Since most Indian schools fall short when it comes to teaching children about how to handle money, the responsibility, therefore, lies fully on the parents. However, they could inculcate the right financial habits in children in a simple yet enjoyable way through their daily activities.
Here are some ways you could help them understand how to manage money wisely.
Pleasurable Experience
You could familiarise them with the topic by introducing fun games. For instance, one could devise a game where one can arrange coins of the same value. Also, taking them to a grocery store and involving them while making purchases can help.
Allowing Them To Handle Money
Giving them first-hand experience in handling money will help them understand the subject. The best way to do it is to let them make small purchases at a local grocer for immediate family needs. It will help them hone basic calculation skills.
After the rudimentary phase, you could give them a monthly allowance with certain ground rules to check if they understood the subject and monitor spending patterns.
Prioritising Wisely
You can give them an opportunity to earn more through small jobs besides their monthly allowance if they want to spend or earn extra money. This will help them to prioritise their needs and manage money well.
Healthy Savings Habit
Parents should introduce them to healthy financial habits such as goal-based savings. For example, they could save and buy discretionary items, like a phone, from their
pocket money. It will encourage them to identify what is important and save money for bigger expenses.
Help Assess Themselves
You could help them assess their own spending habits to ensure they don’t repeat any earlier mistakes. Thus, parents can inculcate healthy financial habits by giving them pocket money and helping them assess their spending patterns.
Help Organise Finance
Parents should encourage children to operate their own savings bank accounts when they reach their teenage. So, it is not enough to just open a bank account in the child’s name but teach them how to deposit or withdraw money from the account.
Money Apps Could Help
E-pocket money apps such as Muvin and FamPay work on the same concept. Besides teaching savings habits in children, they allow parents to monitor spending.
After the wallet is installed, parents can directly transfer their pocket money into the wallet, which has tie-ups with various banks. They also help children learn to handle expenses and savings goals and understand the value of money.