Parents are often flummoxed by the petty wishes of their children which makes them spend on things that become obsolete the very next day. It just makes the hard earned money go into the material things that do not hold much value once it’s been welcomed in the home. Trying to give in to the whims and fancies of the kids most of the time to satisfy their needs (or mere impulsive wants) is not going to go down well when it comes to their future regarding financial matters.
However, there are few things that can be taken care of in order to make your child know the value of money and the impact it has on the lifestyle. But before parents drag their kids into the ‘monetary’ conversations it is best to not let your child feel guilty about making you spend money unnecessarily, instead talk to them politely if purchasing a thing has really helped them or not.
Having these conversations is not a onetime thing that parents will do once and the rest is taken care. It is a constant observation and guiding your kid to make him/her understand the spending method, but parents need not be breathing over their child’s neck if he/she is buying anything.
Few things to start where parents can begin teaching financial responsibility:
1. Explaining the benefits of savings:
When a certain amount of cash is give to the children as their pocket money, parents can help the child in helping him/her with their spending. It is better to start early when you want kids to start saving for a rainy day. Let them come to a final conclusion as to how much percentage of money will be saved and the other part which can be spent.
Be up front with your child about the exact amount of money he/she can use at one time. If you’ve given your kid some amount and they spend it on another thing than the specified transaction, parents need not help them by giving extra money. This can make children think that they will always have a back up if their spending is exhausted elsewhere. Be compassionate towards your kids as mistakes are bound to happen but be firm in dealing with their expenditure.
2. Opening a bank account in their name:
Once your kids have crossed a minimum age, they can open a minor’s bank account with the help of their parents. By taking them to the bank and explaining what exactly happens to the cash transactions, this direct involvement will ensure the child understands the concepts. Once they are made aware of the opening and operating their account slowly parents can explain them about savings and the interest that can be accrued on the savings etc.
Not just operating account but also telling them about other things will also broaden the understanding of the child and they’ll be able to make decisions based on it.
3. Letting them exposed to small jobs:
One of the tested methods of making your child realize the importance of money is to let your child earn the money for themselves. If there’s a summer vacation coming up, encourage your child to take up a job. Don’t be judgmental about the work or how much it’ll be paying; these shouldn’t bother parents at all as it is a learning phase for the kid.
The money that a child earns from his/her hard work will not be spent carelessly, if children think that this money is their reward and they’re entitled to do anything with it, parents should step in and explain that it isn’t the case.
4. Controlling one’s own buying pattern in order to guide your child:
To be able to guide your child, parents have to reevaluate one’s own pattern of transactions. They cannot ask the kid to be more mindful of his/her expenses if the parents spend their money as per their whims and fancies. Only by setting up a good example can parents make any difference. Children are really good at imitating their parents and if they see that their parents are spendthrifts nothing can stop them from behaving in the same way unless parents realize their mistake and spend accordingly.
5. Acquaint them with hand-me-downs which are in good condition:
Take your children to yard sales that have things being sold which are not new but definitely in pretty good condition. Explain to your child that instead of buying new things every time, it is more viable to look for alternatives that can do the same job at a lesser price. The other things that can be done are telling children about toy and book libraries where they can pick whatever they like, for a fortnight it can be used and it must be returned after the stipulated time.
This will help a child to share things and not to get too attached to material possessions.
It always recommended to ask your child if they’ve confided in you to buy something, whether the thing that they want (which most of the times they call it ‘need’), is just for mere satisfaction or does it serve a lasting purpose? By talking to your child this way will make them think about their expenses and can act like an eye opener for them.
Of course this will take time, as at first parents will get to see their purchases that don’t last a day but things will improve overtime.