The other day my daughter was telling my son, “You spend all your money that’s why you are not able to buy dress for Tom”. I got curious and asked her what has happened? She gave me an annoying look and said “Mamma why can’t he understand the simple thing that he needs to save to buy what he wants. He spends all his money as soon as he earns it”.
Wow! that was the Eureka moment for me.. interalia all the time waste, addiction to mobile phone and blah blah, it is teaching my kids the lessons regarding money in its own way. This tom, is a fictitious character as Cat on my phone. They demand new things every time and kids have to buy it from the money they earn from the same online game.
This brings me to the topic of inculcating the financial prudence in our kids from an early age. It is good for them to understand the recipe of financial freedom:
- Earn money
- Save money
- Invest money
And once they have learnt this art believe me you don’t need to save for their future. Good habits should start early. and the habits we acquire as a child stay with us forever.
This little game on my phone was teaching my daughter all the relevant lesson of investing:
- Earning money is difficult – they have to watch some advertisement to earn money/points.
- They need to forgo short-term whimsical spending to get their long-term goal they need to save the points to buy what they want
While you may have your own way of teaching your kid, I suggest have them understand that earning money is difficult. Connect their pocket-money with any household work that they do. And be strict and limited in that approach.
Saving is equally essential. You can give them the target that they will sponsor their own birthday party from their own savings.
Most importantly get them open a bank account, let them handle their account. Invest in short-term Fixed deposits on their behalf and let them see the interest getting added to their account without them to do anything.
With this exercise you would have shown them the financial freedom. When your money works for you.
There is no age for learning however, young minds are most easy to adapt and learn. Ideally you may start teaching them at the age of 10. Give them complete freedom regarding the small portion of their money. Run entire cycle with them EARN, SAVE and INVEST.
So, this 14th November, give your kids the gift of lifetime - understanding of financial Freedom.