What Are the Ways to Make Your Child Money Smart?

source: greencountryfcu

According to a survey conducted by Momspresso, almost 96% of Indian parents had a feeling that their child does not have enough knowledge regarding financial and money management tools; thus, they need a trusted resource for their financial education.

However, at present, Indian teens are inclined to learn about new-age financial solutions. Parents are also keen to teach their children about economic and money mechanisms.

Here's how you can give the parents a head start on information regarding raising money-smart kids.

Teaching your child money management and their core curriculum prepares them to take control of their finances and thus leads them to financial success. 

Here are some ways following which you will be able to know how to make your child money smart.

1. Instil Good Money Habits

A person greatly influences their children because usually, a child tries to mimic their parent's actions. So, most of the time, the child learns the process and habit of saving and spending from their parents.

Thus, parents need to teach their children the importance of savings in the long run. They should also teach them proper decision-making regarding spending and savings. It will make your children financially secure and help them gain financial independence.

2. Inculcate in Them the Value of Saving, Spending & Giving

To make your children realise the value of money, it is significant for you to teach them the concept of "save, spend and give." Whatever money they are earning at this time through allowances or as a gift should be split into these three boxes – Save, Spend and Give.

This practice will instil in your child judicious and decision-making saving habits. Thus, they will know how to prioritise where to spend their money.

3. Make Them Realise the Need for Money

Another way of raising money smart kid is by teaching your child the critical aspect and need for money. When the children know the necessity of earning money to purchase whatever they wish, they will gain an urge to become more financially responsible. 

Wishing to purchase something way out of their budget will make them realise the importance of money in fulfilling their desires. It will foster their decision-making at a very early age. Also, parents can sometimes offer their children monetary rewards for doing small tasks to encourage them.

4. Open a Savings Account for Your Child

Many banks allow children easy access to savings accounts. It helps them to save more money for their future in the bank to accomplish their goals. Through this, they will also get to learn about money-saving skills.

It will also teach your child how to earn interest from the bank based on the money accumulated in the savings account.

5. Educate Them to Spend Wisely

An essential way of raising money-smart kids is to teach them how to manage their money wisely at an early age. They must know whatever they are earning should never be simultaneous with whatever they spend.

They must understand how cost affects the purchasing decision. Also, you must educate them regarding how they can limit their spending amounts using discounts and coupons, how to avail of them, etc.

6. Give Them Control and Allow Them to Make Mistakes

Whatever money they have kept aside as savings, ask them to spend it as per their desire at their birthday or any other festive mood. It will offer them a sense of ownership and responsibility for their finances. 

Also, they will face negative consequences if they make wrong choices while spending. It helps them in making smarter monetary decisions in the future.

7. Teach Them About Investment

Teach your child how they can boost their wealth in the long run by investing their small amount in the right avenues. There are different types of financial schemes and plans launched by the Government for children that can help them be financially sorted after a certain age.

Ask your children to make a small contribution to them and allow them to track their investment progress independently. It will help them understand how to make the right investment choices.

8. Introduce Them to Budgeting

While raising money smart kids, you must consider introducing them to budgeting. It involves the strategies to divide their expenses into different categories and set aside some amount for each of them.

For practising, you can often involve them in your family's monthly budget and ask for their suggestions or plans on expenses. It will boost their confidence and give them an idea about their family's budgetary needs.

9. Keep the Conversations Going

Last but not least, continue talking to your child regarding money, investment and other financial topics as long as possible. From time to time, this will train them regarding other financial responsibilities. Also, it will eventually help your children establish smart monetary habits from an early age.

Introducing the money concept to your child early is an essential step for raising money-smart kids. It will keep them away from financial stress when they grow up to be an adult, and they will experience a bright financial future.