It is your responsibility as a parent, to make sure that your child is equipped with all the financial knowledge required to navigate in life. Understanding and managing personal finance have never been so important. Lessons on personal finance will make sure your child understands the value of money and avoid making common mistakes such as “borrowing more than you can repay”.
Important lessons on personal finance for your child:
Money is limited
Now that everyone has started swiping their cards everywhere and society moving towards a cashless era. It is crucial that your children know and understands that there isn’t an endless supply of money. But for them to understand this you will need to teach them that cards are just a medium and not the well of endless money.
Money is not free
For them, every single thing is for the taking. And as a parent, you are earning and providing for your child. But you need to make your child understand that money is not for free. It is a reward, you are getting for the hard work. And that everything has a price tag. Through this, your child will be able to comprehend its value and appreciate how hard it is to earn every dirham.
Idea of saving
Every Dirham counts. The earlier you instil the idea of saving, the deeper its roots will go. Fulfilling every single demand of your child will not make you a good parent. It will only deprive your child of learning the crucial lesson on saving. Instead of buying all the amazing toys for your child, give them money as a reward for completing the chores and leave the choice on them to save or buy their toys. Open a Child savings account for them and create enthusiasm in them towards saving.
Teaching the art of Comparing
Start taking your child along for shopping and provide them with options to decide on. Teach them the art of comparison on the basis of price, need and want. Let them know that a decision once made is final. This will develop the skill of choosing the right option in them.
Consequences of choice
It is important for the child to understand that money once spent is consumed, a choice made is irrevocable. Hence lesson on prioritizing and the importance of a monetary decision should be taught. This will allow them to know the importance and impact of choice once made.
Maintaining allowance record
This is one of the most important habits you can instil in your child. Teach them to record every expenditure they make from their allowance. This will start a habit in them and can help them keep a track of their spendings even in older age.
It is never too early to empower your child in becoming a financially responsible adult. The lessons you teach them now will help them face and solve critical situation and make them financially stable. The seed you plant today will bear the fruits in the future.