How to teach your kid to invest
The first thing you need to know as a parent is that the best way of teaching your child about money is leading by example. There are better chances of your child learning good financial habits when he sees you practicing them, rather than you telling him or her what these habits are. Better still if he goes through this himself, as his understanding will be far better through experiential learning.
1. Whether there are money constraints or not, you still need to tell your child that these constraints exist. More importantly you need to show this by not buying anything and everything that he asks for, irrespective of your being able to afford it or not. Not only that, you need to exercise restraint when it comes to spending money on something that you want. It could be a movie starring your favourite actor that you skip watching on screen stating that it is too expensive an outing and you will instead watch it on TV when it will be telecast in a few months.
2. Discuss how planning for something, waiting and accumulating money for it and then buying it scores much higher than instant gratification. Resisting impulses is a habit which will serve your child well not only in the financial sense but also generally.
3. Start him on budgeting even as early as 5-6 years. Tell him X is the money he gets for toys and he can buy whatever he wants but this is all he gets till his next birthday or for 6 months. This will teach him to look at toys within that budget and those that will last longer. He may not get it immediately oe even the first couple of times. He will buy one expensive toy or a toy that breaks soon and realise on his own that it is a wrong choice.
4. Money earns money i.e. the compounding story is a concept that you must familiarise your child with. Start with simple examples of how bank interest works.
5. Give an allowance to your child and have him manage his small expenses with it. It will teach him the value of money, concepts like budgeting and saving.
6. Have a system of rewarding chores. While they should not be doing chores just to earn money but they need to understand that to earn more money you need to work more and work harder. It is very critical in todays world to teach your child to be financially responsible. Shweta Jain is a Certified Financial Planner and has been an advisor for the last 10 years with www.immpl.com.
Courtesy: Shweta Jain
Shweta Jain is a Certified Financial Planner and has been an advisor for the last 10 years with www.immpl.com.
1. Whether there are money constraints or not, you still need to tell your child that these constraints exist. More importantly you need to show this by not buying anything and everything that he asks for, irrespective of your being able to afford it or not. Not only that, you need to exercise restraint when it comes to spending money on something that you want. It could be a movie starring your favourite actor that you skip watching on screen stating that it is too expensive an outing and you will instead watch it on TV when it will be telecast in a few months.
2. Discuss how planning for something, waiting and accumulating money for it and then buying it scores much higher than instant gratification. Resisting impulses is a habit which will serve your child well not only in the financial sense but also generally.
3. Start him on budgeting even as early as 5-6 years. Tell him X is the money he gets for toys and he can buy whatever he wants but this is all he gets till his next birthday or for 6 months. This will teach him to look at toys within that budget and those that will last longer. He may not get it immediately oe even the first couple of times. He will buy one expensive toy or a toy that breaks soon and realise on his own that it is a wrong choice.
4. Money earns money i.e. the compounding story is a concept that you must familiarise your child with. Start with simple examples of how bank interest works.
5. Give an allowance to your child and have him manage his small expenses with it. It will teach him the value of money, concepts like budgeting and saving.
6. Have a system of rewarding chores. While they should not be doing chores just to earn money but they need to understand that to earn more money you need to work more and work harder. It is very critical in todays world to teach your child to be financially responsible. Shweta Jain is a Certified Financial Planner and has been an advisor for the last 10 years with www.immpl.com.
Courtesy: Shweta Jain
Shweta Jain is a Certified Financial Planner and has been an advisor for the last 10 years with www.immpl.com.
posted by VALUE PLUS @ 1:11 AM
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