Children's Day 2021 Special: Good Money Habits - How parents can teach them to children

Every parent dreams of giving a financially secure future to their children. Parents always want to make their children financially wise by inculcating money habits in them so that they are able to achieve a financial stable future. However, many parents often remain confused or don't know how to go about it i the right manner. On the occasion of Children's Day 2021, here is a guide for parents to secure a financially stable future by inculcating good money habits.

"A child learns from parents. That said, it is the duty of parents to teach kids about money management. In fact, you can help them prepare wisely, by doing simple exercises. These involve managing school activities, pocket money or sending them out to buy products. All of these can help a child develop smart money habits," Archit Gupta, Founder & CEO ClearTax said.

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"Teaching your kids how to manage money is vital in today’s day and age. Managing money is something even adults grapple with, giving them an early head start will help them make fiscally wise decisions later in life," he added.

Suggesting about keeping accounts/budgeting, Gupta said, "Slowly introduce the concept of budgeting to your children. No matter how small an allowance you choose to give, ask your kids to keep track of how much they spend and where they plan to spend it. Inculcating such habits early on will prove to be beneficial later in life. Once they start earning, they’ll be able to manage their income better."

Commenting on developing good money habits, Javed Tapia, Founder of Slonkit, says, "Once they understand the benefits of saving and start doing the same, teach them budgeting. Guide your children to document their expenses and ask them to set monthly budgets. If needed, help them categorize their expenses, put a limit on spends in each category and monitor their expenses across categories."

"Avoid  giving allowances to your kids. Try paying them commissions based on chores they do around the house such as taking out the trash, cleaning their room, or watering the plants. This activity will help them understand that money is earned and not just handed over. It’s important to give children some money to manage. However, ensure that they have earned it. Offer your children an allowance on completion of a set of household chores. This could be as simple as setting the table for dinner," Tapia added.

"Try not to give into all your children’s whims and fantasies. If they make an impulsive demand, ask them to be patient and reason with them as to why they need it. Instead of giving in, encourage them to wait.

Delayed gratification helps develop patience in your  children as well as prepares them to make level headed decisions," Tapia added.

In concluding remarks, Gupta says, "Educating your children about money will not be easy, but if you follow these steps, they will surely be successful when they get older."