In today’s age, parents are overanxious to keep their children happy and safe. "So what is new about this trait?" you might ask. Parents have always wanted this for their children – in this age, or any age.
What is the difference? A few decades ago, parents had more time with their children and less money; today the scenario has reversed. With both parents engaging in competitive careers, money is more plentiful, but time is not. As a result, parents tend to compensate for their inability ‘to be there’ with hefty allowances, a luxurious life, and by indulging the spending habits of their children.
The Value of Money Needs To Be Inculcated Early
Are you one among this category of parents? If so, you need to understand that it is very important that your child knows and appreciates the value of money, if you want him or her to grow up as a responsible and self-sufficient adult.
The problems with credit, bankruptcies, and financial crisis of the present generation would be much less if people had been taught the importance of saving in their childhood. You need to raise money savvy adults and for that, you need to teach them to save and invest while they are still children.
Five Tips to Teach Children How To Save Money
Children are like clay: they will turn out the way you mould them. Here are five tips that can set your children on the path to become financially enlightened adults.
1. The magic of investment – investment is not a term that's used only in the adult world. You could highlight the beauty of investment to your children and set them on the path of passive wealth generation. Show them how to invest with fast turn-around scenarios, so they can marvel at how money can beget money. Once they realize the power of investment, they will normally look for opportunities to do so to increase their funds.
2. Goals are necessary – nothing can be accomplished without firm goals and strategic plans of action. Encourage your children to save and invest money toward a certain goal – laptop, cell phone, play station, karaoke system, and so many others. You might like to offer a matching grant for things that are more expensive, so they will not get frustrated when the period for putting together the required funds becomes too long.
3. Show your children the alternatives – often your children are so focused on one matter that they cannot see alternative ways to use their allowances. Offer them choices that will help them use their money better. Show them how they can get the best out of their funds, and soon enough they would weigh every purchase by the value for their money.
4. Show them the power of saving – saving a little over a long time can make a small fortune for your children effortlessly. Show them how they can put together a considerable sum by just setting aside a small sum – say, 5-10 percent of their allowance – over a year or so.
5. Be an example – children learn best when they see their parents applying the principles that they are taught in real life. Involve your children in the financial decisions of your family, and let them know how the better things such as a car, vacations, and other major consumer items are bought. Practice what you preach; your children will learn best by example.
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