Financial tips a father can share with children

In many ways, how children view and approach the concept of money at an early age will go on to define and shape the course of their financial lives. In most Indian families, the father is still the primary earning member and a lot of children naturally absorb conscious and subconscious cues from them on how to approach the subject of money. Here are five important lessons that fathers can share with their children, that will surely make a big difference to their lives.

The power Goal setting:

Teach your kids the importance of setting financial goals and saving for them systematically. For instance, your child may be craving the next latest video game, mobile phone, or gizmo. Rather than just ceding to their demands each time, encourage them to save for these pleasures at least partially, through their pocket money. Perhaps you could pitch in with a matching or much larger contribution, but the lesson of ‘saving in advance for goals’ is still inculcated! As a further step, you may even show them how to invest these short-term moneys via SIP’s in arbitrage funds or recurring deposits.

The Magic of Thrift:

A penny saved is a penny earned. Teach your kids the value of thrift when it comes to buying any product or service; without materially compromising on quality or experience, of course. Balance is key. Also, educate them on the importance of driving a hard bargain with everyone except the less fortunate. The art of saving small sums of money by cutting out wasteful expenditures is a valuable skill indeed.

Delayed Gratification:

The famous Stanford marshmallow experiment firmly established the need and importance of being able to delay gratification instead of trying to instantly fulfil our wants. This becomes even more relevant in today’s “insta” generation! In the experiment, children who were able to ‘wait it out’ for a second marshmallow fared much far better in life than the more impatient ones who were unable to control their impulses. Keeping this in mind, it would be wise to inculcate the ability to delay gratification in your kids early on in their lives. Systematically reinforce this habit by rewarding them with “something better” is they are able to wait for it a while longer.

Responsible Spending:

The ability to spend responsibly is one that will not just impact your child’s personal life, but their business or career success too. After all, capital budgeting is such a critical aspect of business management! To teach them this life skill, you should be strict with monthly budget that you allocate to your kids. If they end up splurging a large part of their monthly pocket money on one thing (IPL tickets or a new video game, for instance), they should learn to compromise on other aspects of their lifestyle (say, outings with friends) for the rest of the month to compensate instead of seeing you as an “ATM”! The skill of spending responsibility will no doubt prove to be an invaluable life lesson for your children.

Giving to the less fortunate:

Lastly, teach your kids the value of giving back to society. Be it elderly people, homeless people, or animal shelters; teach your children the value of generously helping others, early on in their lives. To begin with, you could encourage them to donate a small sum of their pocket money to a charitable cause that appeals to their heart. If not money, encourage them to volunteer their time. As the years go on, giving back will become a natural aspect of their personality; shaping them into value-creating members of the society in the process.