An essential life lesson, the importance of saving money and building assets often takes a backseat while we are educating our children. We teach them many things every year, how to ride a cycle, how to eat like a lady, how to dress smartly but how many of us actually sit down and teach them how to save money?
Today, the spending power of the youth has grown exponentially while their understanding of financial matters is abysmally low. Credit cards have become all too common among the youth and at the end of the month when they have to pay their bills, they are very confident about the fact that they can tap their parents any time.
Dileep was ecstatic when he got his first job at a good software company and the next six months went in a haze of delight, when he swiped his brand new credit card and unleashed his plastic power. He got himself an expensive music system, brand new mobile, a laptop and splurged the money that he didn’t have, on things that he always wanted. After six months, he was in debt. Buying things one after another every month blew a big hole in his pocket and soon he had to borrow money from his parents for basic expenses. It took him another year to completely clear the loan and by then he had learned a hard lesson indeed.
When the youth of today get the buying power, 90% of them act like kids in a candy shop. They purchase things that they want, as opposed to need. Peer pressure is yet another factor that doesn’t come attached with some good sense. Splurging money on designer labels, latest mobile phones, luxury hotels and discotheques have become the order of the day and in the morrow they wake up to piles and piles of bills and statements from the Credit card company.
How do we ensure that our children do not end up making the same mistakes?
1. Just as ‘charity begins at home’ saving money too is a lesson that kids learn from their parents. Saving money is a life lesson that needs to be imparted to the kids right from a young age starting from a small piggy bank.
2. Do not indiscriminately give them cash whenever they need it. Let them earn that money through hard labour (Cleaning the house, helping to do dishes etc.)
3. If they need a toy/gadget or a new vehicle let them save their pocket money for a year and at the end of the year, you could match equal amount money for the amount that they saved.
4. Teaching the kids the difference between wanting and needing is of paramount importance. It will help them to prioritize their spending in the right direction when they grow up.
5. Teenage kids can be taught to manage their bank accounts. Banks today have many flexible recurring deposit schemes that allow their customer to save money every month for a specific goal.
6. Making the kids responsible for their own spend is a good way to impart them valuable lessons. If your kid wants a mobile phone, let them pay their own bills.
It is never too late to start saving money and it is important that we teach our kids before it is too late.
Image Source : http://i.huffpost.com/gen/1185756/images/o-SAVING-MONEY-facebook.jpg