Children usually pick up their habits from their parents and teachers, with whom they spend most of their days. One of the few life lessons that you could teach your children is money management. A science that they can pick up from you and learn going forward. In all the chaos of competition and marking tough standards that we measure our children against, we usually don’t realize that a key aspect of their upbringing is financial literacy as well.
Rising inflation in Pakistan is making it increasingly difficult to manage finances strategically. This is something our children need to learn too. These principles can help them with their future, and equip them to deal with the critical consequences of high cost of living. Teaching children the concept of money, managing money and financial planning can help to bring them up as financially responsible adults.
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Young children can easily learn the concept of money, and the worth of money in terms of the number of items you can purchase from a single 100 rupee note. Some key ways that are suggested for younger children include helping them understand that things are purchased with money, and that there are needs and wants between which they should be able to distinguish. Moving on to the primary level age, children pick up concepts quickly and this is the perfect age to impart some money management tips.
Teach Your Children More About Money
- Explain the concept of earning money: Assign simple tasks to your child for which you would compensate them with a small monetary value. This primarily builds the concept of earning through effort. It also helps to build a sense of responsibility builds self-worth. With that, children can also understand the concept of spending when they realize the effort they put in towards earning that money.
- Evaluate concepts of savings and investment: You can use simple exercises to demonstrate these concepts of savings and investments. This can build a great sense of ownership and achievement on what they can do even if they are starting small. For example, place a money jar at home in which they will start adding their money to the jar. Bring that jar out at regular intervals, like every quarter, and count the amount saved. Have them put this money in a savings account, to show them how money can grow when saved over time. There are banks in Pakistan that do open savings account for children, for as low as Rs.5. Some of the banks that have the facility to open an account for your children includes Bank Al Habib, UBL, MCB, Bank Alfalah.
- Elaborate on the concept of investment: Investment may be a complicated process to talk about when discussing it with a child. However, simple games and concepts could be used to elaborate on what an investment is and why it is important. You can always take out different games to play with them. For example, Monopoly can be a great way to help your children understand the concept of investments. You can start small and gradually build up the lessons on investment as to property, housing, cars, etc. But start small so that they can pick it up going forward.
Bigger Children, Bigger Lessons:
As children grow older, they are ready for bigger lessons in money management as well. Teenagers are well on their way towards being a responsible adult and can grasp complicated lessons in money management as well.
- Explain the concept of budgeting: Teenagers can be taught the concept of budgeting, how and why they are made. Real examples related to budgeting in terms of income, savings, and expenses can be given. They can also be involved in the exercise of household budgets so that they can understand the mechanics of it within a household.
- Teach them the concept of tracking money: Money tracking apps can be used to manage money that your child has earned and saved over time. You can also show them how expenses can be tracked on the app or website to evaluate where the money is coming from and going.
- Talk about the traps of credit: Credit cards are going to become key to any teenager’s life, who will soon become an adult and finish their higher education. Discuss key problems associated with spending on credit versus spending in cash. Explain the issues around credit card spending, and explain how they can eat away at your income and investment.
- Don’t forget to teach your children about giving money and helping the poor. As well-balanced system of asset management and financials is stabilized only when there is linkage of giving some portion of money from the rich to the poor ones in form of donations and gifts.
All the best for your child and fingers crossed to see them as a financially literate adult of tomorrow!