Teaching financial concepts to children can have compounding effect on their future including your life. If parents teach financial concepts to their children at their beginning of journey of life, in later life those children become the assets. Most children create nuances when they hit their puberty. At that time they can understand and help their parents and family in regular maintainance of household expenses.
In this article I discuss few points that will help you enforce financial discipline in your children.
1. Teach them the value of money
If you give your children what they want everytime then that will cause problems later in their life. They will subconsciously think “my parents always give me what I want. Cause my parents has huge money at their disposal . “
Now if you think in long term perspective, and just give them what they need along with few luxurious items. So their demand will be less. Take for example your son Or daughter loves chocolate,milkshake,toys, castles etc. You know what they love. So give them chocolate one time per week instead of fulfilling their wish every time they ask you. Say them you need to have money to buy these things. It will stay in their mind. You can repeat the above strategy with your children for long enough time as long as you don’t see any changes in their behavior.
2. Teach them the difference between a luxury and necessity
It is not that simple to make your your child understand the difference between the luxury and necessity. But if you repeat the step 01,slowly your toddler will understand that feeding themselves on regular basis is a necessity. Having huge amounts of chocolates, toys is not necessary .But Having few chocolate, toys is sufficient for now. They will understand that my parents don’t have extra money to spend. That’s what you want.
3. Say them the stories of real world in childish way
Real world is cruel where bankruptcy often happen from time to time. People come to roads from their rich luxury life because of overspending. You don’t need to say the truths in these straight forward manner. Children love stories about demons, angels, fictional genres. Tell them a story where two people, one from rich who indulge in overspending and luxurious life, another one is from poor who earn money honestly. How their life is changed when both of them experience hardship. One who is rich come to bankruptcy because of his bad habits such as overspending, addiction, and the second poor man saw the hardship as opportunities, creating wealth. Thereby poor man get a successful life because of his money management. Make an story based on above outline.
4. Gift them rewards
I know it sounds contradictory to what I am trying to say. But when they achieve something. For example if they scored high marks in examination, or when their birthday occurs, gift them presents. Don’t gift them another toys. Instead gift them books on financial literacy. There are lots of books of finance for kids. Gift them those books for years to come. Reduce all luxurious items from their life. Make sure they study those books.
5. Gift them money to test them
This point also sounds contradictory to what I am trying to say. But listen to me. When you remove all luxurious items and cadbury chocolate from their life they will experience hardships according to their definition of hardship. You have to continue that for months to years to see any considerable changes. When you see considerable changes, gift them money. Monitor them to see what they do with that money. Money is wonderful thing to them when they realize that. When they learn financial literacy teach them few skills to earn money. Their teenage life would thank you for this.
Conclusion
It’s tough to teach them the meaning of money. But with consistent discipline they will understand that. It sound harsh to you right now. But in long term it will help their future. You want a happy financial life for your children. So next time before you start doing something for your children think long term. Thanks for reading.
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