20/06/2018
Warren Buffet bought his first stock at age 11 but still felt he could have started earlier. However, investing as an 11-year old may not be feasible for most kids. But those under the age of 18 should, at the very least, be encouraged to start. Financial experts believe that it is never too late to start saving. And the sooner you start, the better it is for your future.
It’s important to train kids at an early age and here are a few things you must start with.
Savings
Make them put aside a certain amount every month to accumulate enough over a period of time to buy toys or something they wish to acquire. This would not just teach them how to save but also help them to be patient in the process. Once they are given the responsibility to manage their pocket money, they would eventually learn how much to save and how to spend. This learning would come handy in managing monthly budget once they grow up.
Concept Of Necessity And Luxury
We are living in an age of plastic money, wherein it’s convenient to buy first and pay later. The temptation to splurge on today’s ‘wants’ is much more than that of saving up for tomorrow’s ‘needs’. Spending according to your goals requires a lot of planning and discipline and they show up best if learned as a child. You can teach your kids to hold on to their money by setting goals for them and giving them a timeline for meeting those goals. For example, you can ask them to save for a couple weeks to buy story books and save for a few months to buy a PlayStation.
Budgeting Allowance
When you chalk out a budget for the month, just read it aloud to your kids and explain why you prioritised certain items over the other. Once they have learned the basics of saving and spending, you can give them the task of setting their own budget. This would help them understand that there is a limited inflow of money and that all their needs and wants would have to be fitted in with what’s there. This would sharpen their math skills and develop an understanding of when to splurge and when to save.
Necessity Of Hard Work
You must let your children know that money doesn’t come easy and it requires hard work. An ideal way to instill the importance of money in kids is by starting a reward programme for them. On completion of a task such as making their own bed or packing a lunch box, you can give them a cash reward. The money they earn can then be used to buy something they want. This would help them to establish a link between reward and work, and motivate them to make the effort.
