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Think Long Term: Teach Your Child to Become Personal Finance Savvy

By Charles Hopkins Published 09/19/2006 | Finance

There was a time, when the primary duty of the parents had been to introduce their children to the basic values of life like honesty, discipline, sincerity, truthfulness, etc. But as 21st century parents, you have to train your kids in another important aspect of life and that is the aspect of managing money matters. You cannot deny the fact that this is a world where every success is measured by the scale of how many dollars you bring home every month and you will be able to live a comfortable life only when you are well provided for financially. So for the parents of today, it is only practical to get their children introduced to the basic rules of money handling as early as possible.

As a 21st century parent, you might want your child not just merely doing well, but excel in whatever they do. If you want your kid to turn out to be really smart, you should start teaching him in the money management basics right from the days he first started to learn simple sums. Let him know the importance of money in living a respectable and happy life and the ways to handle it properly. Why not tell him your childhood stories to motivate him? Also tell him about the stories of others who had the affinity of handling money in a prudent way since their childhood. Make sure, as soon as the child learns to recognize the numerical figures, he learns to figure out the numbers in dollars, coins or checks.

As the child grows older, make him handle the money on his own. Send him to buy things from local stores; it will open his eyes to the system of exchanging goods for money and with time he will learn on his own how to calculate changes.

From an early age, instill in him the value of saving. Encourage him to save by buying him an attractive piggy bank. It is also a good idea to open a childs account in his name and encourage him to maintain a savings book. This will give him insight into the bank operations right from an early age. Watching the money accumulating in the account will help him to develop a positive attitude towards saving. Encourage him to always set aside a portion of his pocket money or the cash he received as birthday gift or other kinds of allowances.

It is hard to tolerate watching a spoiled brat misusing their parents hard earned money. But you can prevent this trait from developing in your own child, if you take care from an early childhood. Always talk to him about the importance of money, that we need money to buy the things that we need, and not everything in this world that catches our fancy. Just sticking to the principle of not buying him each unnecessary stuff that he demands, you will be able to impress upon him the value of budgeting. It will not take long when he will learn to distinguish between a good purchase and a bad one.

Finally, always involve your child in the financial discussion of the family. It will help him to develop a financial responsibility towards his family and he will get the confidence that his advice also count for such important matters.