More often than not, parents will wait for their children to grow up and begin earning before bringing up the topic of personal finances. As parents, we hope that enrolling our children into the best schools and colleges will help them land their dream job that will enable them to make wise financial decisions in the future. However, the fact remains that money-management lessons are seldom taught that easily. Children pick up on what they see happening around them and what is taught to them. Thus, here are a few basic financial lessons that you can teach your children in order to ensure they have a wealthier future.
1. Talk about Money
No, you donâ€™t have to share all your money woes with your children, but it doesnâ€™t hurt to talk about money every now and then. When your children are young and they watch you swiping your credit card at the mall or drawing cash from the ATM, they might not exactly understand where this money is coming from. Make sure they know how much you earn and how hard you work in order to be able to afford certain things.
2. The Importance of Budgeting
Children need to learn how important it is to live within their means. In order to teach them this, make sure to have them sit with you when you are making the monthly budget. Let them understand how money is divided between different costs and how much is directed towards your savings and investments. Creating a budget or a savings plan will ensure that you know exactly where your money is going and will keep you from making bad financial decisions. Make sure that your children are taught the importance of budgeting from an early age, so it becomes an ingrained habit.
3. Limit Borrowing and Pay Debts
As your child grows up and moves out of the house, there is bound to be an increase in their number of commitments and a greater need for finances. During such times, he/she might be tempted to get a personal loan or borrow money from friends/family in order to pay for their needs. Thus, make sure that they know the implications of taking a loan or borrowing from others, and that they donâ€™t use this option unless it is absolutely necessary. So, if they ever need to borrow money from you, regardless of how young or old they may be, make sure to keep an account of this and set up a repayment system for them to pay you back what they owe.
4. Saving is Key
One of the most important things you should do as a parent is to teach your children the importance of saving. However, this is easier said than done since your child may not necessarily be making any money in the first place. One way to solve this problem is to make sure you assign tasks/chores that need to be done and pay them for getting it done. Helping your children earn their money is the best way to teach them the value of it. Further, you can also open a savings bank account to deposit their money and let them make transactions on their debit card.
5. Insurance is Important
The importance of insurance cannot be overstated. However, many young adults skip purchasing insurance because they are unaware of the benefits of insurance policies. Thus, make sure that you
teach your children the importance of a life insurance plan by purchasing a child insurance policy for them at a young age. A life insurance policy provides a financial cushion to oneâ€™s dependents in case of an unfortunate and untimely eventuality. As your children grow up, they might also want to consider getting a term insurance policy for themselves.
Similarly, make sure that they know the importance of purchasing a motor insurance policy and a health insurance policy. A health insurance plan can provide much-needed financial relief in the case of a medical emergency. Thus, make sure to purchase a family floater health insurance policy and enrol your children under them. Ensure that your child is aware about the importance of paying the premiums on-time and renewing the policy in a timely manner.
In conclusion, teaching your children about the value of money is important. However, what is perhaps more important is to help them learn these life lessons through shared experiences and teachable moments, thorough information about it can be found in https://www.bankbazaar.com/ . Your children are sure to look up to you. Thus, practice what you preach and use this opportunity to set a good example!
This article has been produced by TNM Marquee in association with Bankbazaar.