You get up early in the morning and read the newspaper, over a hot cup of tea. The first thing you read… Man commits suicide due to financial worries, A daring ATM Robbery, Fraudster dupes citizens of lakhs of rupees promising unbelievable returns, Naïve investors lose money in Ponzi schemes…The list is endless. You switch on the TV and watch the news. You see pretty much the same thing. Wonder why so many citizens who are so smart, are tricked out of their hard-earned money so easily? Can something be done about it? The answer is Yes…Teach Your Children To Manage Money. Children need to be taught to handle money at a young age. The lessons they learn at this age, they carry deep into adulthood. Time for a great saying “If You Don’t Know How To Care For Money, Money Will Stay Away From You”.
You eat 4 meals a day. You need food for survival and sustenance. This is a need. The same holds true for your children. Your children also eat to live. Your children see a toy at the shop. They want it. You give it to them. The following day your children ask for another toy. You give it to them. Every day your children ask you for toys. Your children want….want…want….For your children, wants have become a need. Teach your children the difference between a want and a need. Stand your ground and don’t give in to their demands, no matter how loudly they scream…cry…or shout. When you do not give your children everything they ask, they learn the value of money. They understand money is a finite resource and gets over if you spend too much. Your children understand that you will satisfy their needs and not their wants. Your children will soon stop treating you like an ATM. (Any Time Money).
If you give your children whatever they want; they will never understand the value of money. You need to teach your children, Money Has To Be Earned. Make your children do small jobs for you and pay them for it. Your children clean your car. You pay them about 30 rupees or some amount you want to pay them. You could pay your children for cleaning the house or doing some work for you. Your children learn to relate money to work. Do your children want money? They better earn it.
Your children love stories. Why don’t you tell them a little bedtime story on the need for saving? The story of the Ant and the Grasshopper. The ant works very hard in the summer days, carrying grains of rice on its back, saving for the rainy season. The grasshopper enjoys days in the sun, without bothering to save. In the rainy season, while ants have food to eat, the grasshopper has to starve. The moral of the story “Save For A Rainy Day”. Your children will soon be working and earning a good salary. They need to understand that if they do not save at least some money from their salary, the money will come and money will go. Your children must understand the need for keeping some money aside, for an emergency. Teach your children that in an emergency, no one will give them money. Savings alone come to their rescue.
You need to teach your children something really important. Earning and saving money is very important. Equally important is investing that money, so that it increases and grows with time. Teach your children the value of investing money in a fixed deposit. The money your children invest in a fixed deposit is very safe and also earns interest. The money invested grows with time. Your children learn that investing in a fixed deposit gives safe returns. You must now teach your children about inflation. You send your children to the grocery store every day, to buy fruits and chocolates. Your children notice that the price of fruits and chocolates has gone up after say a few months or even a year. Your children are curious to know why. The population of our country is rising and this increases the demand for goods and services. As the demand for goods and services increases, so does the price. This is inflation. Your children understand that even though they earn interest from the fixed deposit, a part of it is eaten up by inflation. What’s left behind is not much. So how can your children earn higher returns than inflation? Teach them to invest in equity. Teach them that investing in equity can be risky. The best way to do so….Take them to the swimming pool. Teach your children the dangers of drowning, when they first learn to swim. They soon overcome their fears and within a few weeks, they are the kings of the pool. Equity is similar. Higher risk for a higher return.
Your children see you availing of a loan from the bank. They need to understand, This Is Not Free Money. You have to return this borrowed money to the bank, with interest. Teach your children a simple lesson…borrow 100 Rupees from your children and repay them 110 Rupees after 3 months. Your children understand that 100 Rupees is the principal borrowed, which they get back along with an interest of 10 Rupees. Your children realize that if they borrow money from the bank, they have to return this money with interest.
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