In the previous blog, we discussed why making children financially literate is important and how to start with the same. Today, we will dwell into the topic a little deeper and discuss how to instill the right earning and spending habits in them.
As adults, we understand the importance of good earning and spending habits. And even if your child is familiar with the concept of money, he or she would probably not understand where it comes from. Start by explaining to them that the money that is used to buy all the vegetables, toys and other items in the house comes from from the job you do. Tell them that you have to work every day and in exchange for the work you do, you are given a specific amount of money every week or month. You can also explain to them that some people work for themselves and use their special talents to start their own business. If your child is old enough, you can discuss with them the concepts like salary, wages, and entrepreneurship.
HELP YOUR CHILD EARN
Once children learn that they have to earn money, they might become curious to earn some themselves. You can help them by agreeing to pay them a little bit of money in exchange for performing some specific house chores. You can also discuss with them a monthly allowance or pocket money. Pocket money is a great way of teaching children to prioritize their needs and stick to the budget as well. Ask them to make a list of the things they want, and then manage the pocket money in a way that would leave them with some money which can then be 'saved'. This way, they will also have an insight into the fact that it isn't always easy to make ends meet.
NEEDS AND WANTS
When it comes to instilling good spending habits in children, explaining to them the difference between needs and wants could be a good way to start. Tell them how nutritious food and safe drinking water are 'needs' but new video games is a 'want'. When children will be able to draw a line between these two, they would be able to prioritize. Ask them to make a list of all the things that they think they need and want, make a budget and then go shop.
Children are quick learners and these little ways of managing money will help them become smart money handlers in the future. At DY Patil Dnyanshanti School, we use such small but effective ways to teach children various concepts. For more such blogs, keep following us.