Today’s parents often go to great lengths to raise their children without any shortcomings, because they do not want their children to experience the hardships caused by the lack of money that they themselves experienced during childhood. An increasing number of parents find it difficult to say no to their children’s demands. They buy whatever their children ask for and give them pocket money whenever they ask for it.
Only last month, there was a report about a tragic incident in which a father, mother and son fell into a gorge and died while trying to save their son, who had threatened to commit suicide because his parents would not buy him an iPhone. In such circumstances, it is important to understand how we should teach children the value of money.
There are parents who hesitate or are afraid to entrust money to their children. When children are kept away from money from an early age and are raised with a fear of handling it, what parents end up giving them is a negative attitude towards money.
Children who grow up believing that money is something to be afraid of may, when they become adults, find it difficult to handle money wisely and confidently. Therefore, according to their age, parents should give their children money and train them to spend it wisely.
When giving children money as pocket money, parents should make them understand that it is not meant to be spent entirely on unnecessary things. Children should be taught the difference between what is needed, what is essential, and what is unnecessary.
Whenever money is given to them, children should be taught to divide it into three purposes:
Spend some of it on their needs. Set aside a portion as savings. Spend some of it helping others.
For example, suppose a child is given Rs.100. From an early age, children can be trained to divide it-say, Rs.50 for savings, Rs. 40 for their own needs and Rs.10 to help others.
Haven’t we heard some people say, “I have a hole in my hand. Money never stays with me; it disappears like water”?
I have seen people who, despite earning a reasonably good salary for years, do not set aside enough for the common needs of their families and then run around at the end of every month saying that they have no money left. They do not know how to manage their money. They never received any training in managing money at home.
These are people who spend all the money they earn on various things and end up completely failing in financial matters because they cannot set aside even a single rupee for tomorrow. The reason they are unable to save even a very small portion of their income is that they never learned money management from an early age.
When preparing the family budget, involve the children as well. Let them develop an understanding of the family’s income and expenses. According to their age, children should be made aware of the essential expenses involved in running a household- EMIs, educational expenses, water, electricity, gas, petrol, household expenses and so on.
Children who understand that income comes from one source while expenses flow in many directions will gradually learn to control their spending. If a family runs on the income of a salaried person, children should understand that the income arrives only once a month, whereas the need for money exists every day.
This will help them develop financial discipline.
When taking children shopping, do not encourage their tendency to buy everything they see. Teach them that they should choose things that are necessary and of good quality.
Some parents give their children money after making them do small household chores. Financial experts believe this is not a good practice because paying children for their ordinary responsibilities can create an attitude that everything should be done for money.
However, giving children money for certain tasks as a form of encouragement can also be beneficial. It can help establish in their minds the understanding that money is earned through effort and hard work.
When children ask for something they want, do not buy it for them immediately. Give them the freedom to decide whether they really need it or not. If, even after a week, they still feel strongly that they want the item, then be willing to buy it for them.
At the same time, we should not forget that money is also meant to be spent.
There is a difference between staying away from luxury and being miserly. Miserliness sends a negative message to children. But avoiding wasteful spending helps them understand the value of money.
Children grow up watching their parents’ habits of saving and spending. Therefore, children of parents who practise financial discipline, saving and investment, while also being willing to spend when necessary, are more likely to become responsible and capable in financial matters.
There is an idea that we should not be afraid of money. But, in the same way, we should not worship money either.
Understand that money is merely a means of meeting our needs and that it gets used up when we spend it. Spend money wisely.
