Importance of managing money
There is an old aphorism “A fool and his money are soon parted”, which has surely stood the test of time. With this in mind, show your kids the importance of keeping a check over their finances. Kids need to learn early on that managing money has to be active and not passive. Let every item of expenditure be planned, deliberated, and thought through.
Passion vs. money
A lot of young kids in India want to become a Bill Gates, a Warren Buffet, or a Jeff Bezos. What kids tend to miss out, however, is that for all these successful men and women, money was secondary to their passion. Bezos would have never been the richest man if his dream had not been to create the greatest e-commerce platform on Earth. Kids need to learn to define their passion and chase it. The money will follow as a by-product.
Patience is the key
Nothing builds wealth over longer periods of time than the virtue of patience. No speculator has created abundant wealth and no speculator has made a big difference. It is only when you put your money in the right investments and watch it grow for a long time that you see big returns. Children should use this philosophy when it comes to investing their time, money, and other resources.
Money needs to be earned
The ideal financial education for a kid is to understand the priorities of money. The earlier you teach them that money is not an entitlement, the more successful they are likely to be. Like kids must be taught to listen more, they must also be taught the dignity of labor and the need to earn money at an early age.
Focus on budgeting
A lot of actual buying among children happens due to peer pressure these days. Be it a top-brand apparel, or the latest technology, or game in town, kids love to splurge on things they do not really need. This gives them a sense of entitlement, while inadvertently letting a lack of accountability creep in. Here is where a greater focus on budgeting will come in handy.
Borrowing – not a good idea
From the days of Polonius, debt has been a bad word. Children need to learn early on that borrowing in order to spend is never a great idea. If you can borrow and earn higher returns on the money, then it is okay. Growing up, children find plastic to be an easier way of paying because they do not really know what “credit” means. They need to know and understand the limitations and the downside risks of the same.
There is no shortcut to make money
This will become a lot more relevant as your kids grow up. Most children take on college loans for higher studies. Watching other kids doing well in their careers when they themselves are struggling could easily lead them to adopt shortcuts to making money. But, as we have learned time and again, it is the old-fashioned way of making money that really works and pays off. And that only comes when children are taught the importance of diligence, hard work, and patience at an early age.
This Children’s Day, let us adopt a unique approach by gifting our kids the invaluable lessons of financial wisdom.