Usually, we tend to keep our children away from money matters in the house. We either pay for their expenses or buy them things directly, or at the most give them some pocket money. However, financial literacy is an important life skill that your children must know.
If your child is old or mature enough to understand the basics of money management, it would be a good idea to seek their participation in family budget planning. This will help your child to understand how income is earned, household expenses are managed, how to save for future emergencies, etc.
Here are some ways to involve your children in family budget planning:
- Explain to Them the Basics of the Monthly Budget
Whether you maintain an excel sheet, use a diary or use a budget planner app, show it to your children. Explain to them how you categorise the budget into different columns such as sources of income, recurring and unexpected expenditures, investments, etc. Allow them to help you set financial goals. Let them list out different expenses. Get them to find bills that need to be paid.
- Explain the Difference Between Need and Want
This is a very important concept to teach your children. The need is something necessary but wants are something you desire but avoidable. Give them a simple example. If you are hungry, you need food which can be khichdi (need). But if you want to eat a burger to satisfy hunger, then it becomes a want.
- Give Them Practical Experiences
Children learn by observing and doing things. So, take your children shopping for groceries, clothes, toys, etc. Let them see how the budget that was discussed at home is being implemented in real life.
- Teach Them About Banking Transactions
In today’s technology-driven world, we do almost all monetary transactions online. Tell us when was the last time you visited a bank or an ATM? While online transactions are the future, your children must still know about the basics of banking.
Show them what cheque book and passbooks are, how to write a cheque, how to withdraw money through a cheque or debit card, how to check bank balance, etc. Many banks these days offer special savings accounts for children to teach children about banking. You can open one for your child.
We hope these tips will help your child to become financially aware and responsible.
