1. Create a Budget together
Allow your kids to plan for a family event to practice their budgeting skills. Help them also understand the opportunity cost of spending money on one thing that may keep them from having enough money for other things
2. Money doesn’t grow on trees
When kids see bills pop out of the ATM, they don’t realize that money is a finite resource. Explain that you work to make money, and the bank is just a place that keeps it safe.
3. Let them know how Banks work
In India, if you have responsible well-to-do parent’s chances you are already have a bank account to your name. Most Indian parents work their hardest to put their child’s needs above their own in every situation and throughout their lives you will find them keeping aside money for their well-being. Whether it’s for higher education or just something to fall back on in case of their untimely demise, there must be a bank account to their child’s name.
4. Live within your Means
Allow children to indulge in discretionary spends only from their pocket money. Define spends, such as a meal or a new football, which they must buy from their pocket money. If in a particular month they fall short of the amount they need to buy what they want, ask them to wait until the next month for the same. If they are persistent, you can introduce the concept of borrowing and lending by giving them pocket money in advance and deducting this amount from their next month’s allowance. You could even charge an interest.
5. Setting goals
Kids know the concept of setting goals in general, it is time to teach them about setting goals in finances, be it a budget for grocery or long-term savings account. Even a planned big purchase may spell it out for them how important goal setting is and what significance it holds for adults.
6. Open a Savings Account
Explain to kids how compound interest works and show them how their money grows in a savings account. Expand to a checking account once they’re ready.
7. Introduce Taxes
Introduce your students to the term ‘tax’ from a young age, so when they actually learn about it, they do not find it an alien concept. Kids will often be surprised by the withholding on their first salary. Explain the concept of taxes early on and their salary will meet their expectations.
8. Teach about Investing and Long Term Saving
Once they’ve mastered basic banking skills, encourage your kids to learn about the complexity of globalized markets. Explore the idea of stocks, mutual funds, or savings accounts.
9. Teach to Set Goals
Kids know the concept of setting goals in general, it is time to teach them about setting goals in finances, be it a budget for grocery or long-term savings account. Even a planned big purchase may spell it out for them how important goal setting is and what significance it holds for adults.
10. Difference between Saving and Investment
Educate the older children about the difference in saving the earned money and investing it. This includes risk factor, strategy, scheme and methods of investment.
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