(Guest Post Contributed by Stewart Bradley, Member of the Debt Consolidation Care Community)
Personal finance is a complete plan for earning, spending and investing your cash. Unmanaged family expenditures can be larger than expected, leaving you short of funds until your subsequent paycheck. In order to meet long term goals and guard yourself against fiscal emergencies, you must save and invest cash on a regular basis. It is a sort of art, that everybody needs to learn at one point or another. Although personal finance is something that really needs to be taught in schools, in reality this is unfortunately not the case. Following are a few interesting ways to help your kids learn about personal finance while they’re young, before they have to manage their own household budget.
Teach them the importance of earning – Making or earning money is never easy, but kids mostly fail to understand this. You could provide your children with a weekly or monthly allowance, as this will help them in making sensible choices and be trained in opportunity costs. They need to comprehend that their pocket money isn’t simply falling from a tree. Establish an incentive scheme where a part of their pocket money needs to be earned by different tasks like washing the dishes, watering the plants or receiving good ranks etc. You may also add bonus prizes for harder jobs, or tasks extraordinarily well executed. Avoid being too generous with the bonus you give them. This will help them to learn the value of time as well as cash. It’s a good indication if your child is turning down a low-priced proposal and asks for more. This means that they are finding out the exact value for their services. Sometimes, it’s okay to meet their demands but make sure that they aren’t asking for too much.
Let them understand the whole idea of saving and investing – When children need something, they need it immediately. They beg, shed tears and do every possible thing under the sun for you to surrender. It’s important for them to understand that they can obtain what they desire if they have a proper plan for savings. For instance, if they want a video game, ask them to put away a little from their allowances every month. Although a piggy bank will help them in their savings, opening a bank account in their name wouldn’t be a bad idea either. Help them in keeping a track of the amount they have, the amount they are spending and how long it will take for them to reach their goal. Provide them with the option of withdrawing cash from their account, but ensure that they don’t do it very frequently.
Give them some utility lessons – Challenge your kids to reduce gas, water and electricity bills. Make it an interactive session. Ask them to switch off the lights and fans when not required, or take shorter showers. Once they do this and the bills drop by a significant amount, they will come to understand that you need to actually pay for the utilities. This will not only help inculcate good financial habits in your children, and also prepare them for a debt-free life.
Lastly, avoid giving children a long lecture on financial calculation, banking, the national reserve etc. It won’t really help them in any way (at least until they are quite a bit older). When you discuss personal finance with your kids, just try to keep it easy and simple.
Stewart Bradley is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.
)
