Why Is It Necessary To Teach Children About Being Financially Responsible?

We live in a world dependent on money. With an endless stream of expenses and obligations, it is imperative to learn how to manage our means. With a lack of formal training in budgeting and handling personal finances, most of us struggle when we first become responsible for our own income. This Children’s Day, I, Chacha Samajhdar, am here to teach your children about financial responsibility to help them have a more secure future.

Why is it necessary to teach children about financial responsibility?

Well, if you do not teach your kids to handles finances, who will? While children learn a number of things by making mistakes, financial mistakes can cost them heavily. This is why it is a good idea to give your children a head start on basic money management.

Our children grow up with material desires and they will not be able to understand the value of money if all their needs and wants are always met. Children learn by imitating us, which is why it is important for us to set a good example for them. Before they misread a financial slip-up for the right thing, it is better to teach them how to handle finances wisely. This will not only introduce them to the concept of budgeting, but also teach them the importance of saving. After all, “Hero wahi jo jaane sahi”.

Ways to teach your kids about financial responsibility

There are some habits that can be helpful in teaching your children a few lessons about financial responsibility:

1. Teach them how to save:

They will say, “Chacha Samajhdar is sensible” after following my advice to ditch piggy banks and substitute them with clear jars. A piggy bank can be exciting, but a clear jar helps children see the money increasing inside. Make a big deal when their money jar gets full and get them excited about saving. The best way to get them to practise this is by setting an example yourself. Make sure you let your children know that you only spend within your means. Pay off your debts timely and tell your children why it is important.

2. Teach them how to budget:

When you create a budget for the upcoming month, help your children make a budget plan too. Encourage them to carefully list out all the things they want. If they express the desire to own something, ask them to save money so they can buy it themselves. It is a good time to teach them how to prioritise the items if they want multiple things. This will help them to think about their expenses and save further.

3. Define needs and wants:

Children are too young to know the value of things. When you encourage them to save and buy things of their choice, make them buy these things one at a time. This will teach them the concept of opportunity cost. For example, if they buy a toy, help them understand that they will not have money to buy that fancy stationery set they have their eye on. This way, they can weigh their decisions and differentiate between their wants and needs.

4. Let them earn money for chores:

Kids love to help around the house. When my son was younger, I encouraged him to help with the household chores. In return, he earned a commission based on the tasks he finished. Simple tasks such as watering the plants and folding the laundry can be attractive for the little ones. Give them chores that are beyond their daily responsibilities. Reward them with a pre-determined amount once they complete a task. This will give them the feeling that money is earned.

5. Avoid impulse buys:

Children these days get drawn towards making impulse purchases simply because they see us doing it as well. Do not give in by buying something they want the second they ask for it. Instead, encourage them to spend a token amount from their savings to purchase what they want. If the item is expensive, ask them to wait for a few days before they can buy it. This will help prevent impulsive buys and ensure they only get what they really want.

As your children age, you can teach them additional financial responsibilities such as the dangers of credit cards and debts, the importance of being content with what they have, and the importance of giving to the less fortunate. And Chacha Samajhdar will be here to give them a few more lessons as they grow up and become financially responsible adults.