Updated for the last 5 years - Financial Year 2011-2012 to 2015-2016 Thi...
You would agree, in today’s times the most superior of all powers is the economic power. And this power is bound to be so for the foreseeable future, at least till the time your kids have grandkids. Hence, one of the basic skills that any child must imbibe is on ‘money’. We as parents and teachers play an important role in making that happen.
Pocket money is the easiest starting point in creating a strong foundation on money skills. Wouldn’t it be wise to imbibe this skill in your child starting NOW?
Here is a 3-step guide on creating this system within your family:
1. Start Simple
Start with your next visit to the supermarket. Enough trolley riding for your child. Put them down, give them their share of the shopping budget and allow them to decide on their personal purchases. Be careful on the amount though. A simple trick would be to pick your last bill and sum up the amount you spent on their request. A lot more than that makes it unexciting for them to make choices. A lot less makes them feel deprived and restricted. Balance it right. Keep this going on every visit till your child gains a sufficient practice on the art of making choices and you are confident of taking it to the next level.
2. Define the game
Did I just say ‘game’? Yes! The fastest way to generate a child’s interest and participation is to convey it in the form of a game. And why not, the whole economic system is a big game after all. Just like life. Or say cricket. It essentially has no meaning. What could possibly be the meaning in throwing, hitting and chasing a tiny ball. Yet a few rules, some boundaries here and a score board there make all the difference to get a billion people enthusiastic.
Create an interesting game around the money theme for your child. Throw a few incentives. Mark a few boundaries. And yes, remember the score board. But above all, make sure you are enjoying the game as much as your child.
3. Up the game
At some point, your child gets adept at making small choices and masters the art of personal budgeting. That is just the time you must introduce a few complexities into the game. Add a new concept. For example let them save for a big purchase, let them create and use their bank account, let them take a loan from you and let them repay you from their future allowances, introduce them to an investment option, so on and so forth.
Keep this going consistently till your child independently manages all their personal needs apart from rent and other common utilities in the family.
It is important to remember that this is a game and you are a participant, not a coach. You may possibly encounter a situation where you get too tempted to passionately explain a money fact; Hold it. Restrict only to the information they seek from you. Allow them to make and finish their quota of financial mistakes while they are still living with you. It is better that they learn their way than to not learn at all.
Prepare your child to face the bigger financial game in the real world outside. And yeah, May they Win!