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Make your child financially prudent

Set budgets and encourage children to track it against their expenses

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As parents it is our responsibility to create a financially prudent generation. It is our duty to ensure that our hard-earned money and investments are passed on to a future generation of smart money managers. Let’s try using these techniques to make our children financially prudent.

Empower children with the freedom to manage money responsibly: When the parent gives the child an allowance for a period – day, week or even a month, he also gives them the financial freedom to make their own money decisions, make affordable mistakes and practise the art of money management.

Set and track budgets: Set guiderails for your children by creating budgets for them. By setting weekly or monthly budgets for your children and tracking it against their expenses, parents can get enough data to share informed insights on money management with their children.

Help them to earn it and value it: Set goals for your children and reward them on successful attainment. Let your children embrace small challenges such as getting a good grade in an examination, learning to play a musical instrument within six months etc. Reward them with monetary incentives for such accomplishments. This helps children to value the money earned by them and it, often, translates to meaningful spends.

Scout for the best options: Irrespective of the cost of the purchase, parents can encourage their children to scout for better options, negotiate with the seller and get more value for their money. This enables children to use their allowances in a better manner. By doing this consistently, they can develop a habit of valuing money and using it judiciously.

Save for a dream purchase: If the child’s dream purchase is a laptop, challenge the child to save a sum of money from his stipulated allowance. After a certain number of months, say six months of successfully saving the agreed amount, reward the child with the dream purchase. Such small challenges with money management can inculcate smart money habits in children.

SMART MONEY TIPS

  • Give children an allowance so that they can learn from their mistakes
     
  • Set budgets and encourage children to track it against their expenses
     
  • Reward children for small challenges so that they can learn the value of money and spend meaningfully

The author is the Founder of Slonkit

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