The way we handle our money in our working life determines how well or worse-off we are. Those with utter disregard for money, savings and investments, end up living a miserable post-retirement life.
I would say this is the most important lesson in life which some of us come to know when its a bit late.
Hence we should teach these lessons to our children as early as possible:
Lesson #1: Teach Them that Money is Earned by Hard Work
My kid thought that money is produced by ATM machines. Just punch how much you want and it will give out that much to you.
It is important to tell our children where the money is ‘actually’ coming from i.e., from hard work.
Also, I told him if he continues to expect the ATM for money to meet their never-ending desires, you (the caretaker parent) will one day run out of all money to meet their needs in the future.
Lesson #2: Teach Them the Virtues of Saving & Investing
Saving is a virtue, the benefits of which we realize only over a period of time. Thus it’s important for us to make our children early starters on this front. Let’s teach children that there’s more to money than just spending. And teach them by example – through your own saving habits.
So if your child wants to buy a computer game that most of his friends have, ask him what’s the cost of the same, and how much he would need to save every month to reach that target. If he understands this simple math, he will easily recognize the virtue of saving to meet a future spending goal. He will also realize that if he saves more every month, he will reach his target even faster.
Again lead by example here.
Lesson #3: Teach them About the Dangers of Debt
This probably isn’t a lesson a child of 6 or 7 years can understand. But teenagers can grasp this concept very well.
Tell them about loans, credit cards, and other debts. And how it works, if you a home loan or any kind of loan tell them with example concept of EMI etc.
They soon learn that making regular debt and interest payments reduce how much is left to pay for other stuff.
Overall, I think understanding the financial concepts specifically the above lessons are the much more important in life for your child than even the basic school concepts as this will help them grow financially which is what all of us are working towards….arent we?