value of money

As the financial crunch encroaches upon every aspect of most of our lives, a very crucial question for all parents is how much is too much to let your kids know about your household finances? Should we let our children continue in blissful innocence, unaware that problems exist or should we include them in family discussions about money related problems? Is it possible to give them too much or too little information? This is a dubious question because where on one hand we all want our children to just enjoy their childhood without unnecessary burdens, it is quite important to make them understand the importance of money and why they are being denied certain privileges or things.
We have to be careful that our four small words “we can’t afford that” might not instill a feeling of deprivation and discontentment in the child. Secondly, we have to consider the age of our children also. How can we expect a 3 year old child to comprehend what economic crisis means? There is only so much that his small head can accumulate. The most important things for small children (let’s say children of 10 years of age or below) are safety, security and love. In their world, these three things are more important than money and it is our job as parents to explain to them that regardless of what may be going on with the household budget they can feel confident in those three things. Having done that we can think of explaining why certain things are being put on hold in an age appropriate manner. Older children may feel more secure if they are included in family discussions and will also be able to get prepared for any significant changes in your lives due to finances. You have to be careful that your children don’t misinterpret your and your spouses’ fights as their fault.
I believe that children should be educated about value of money and the family problems in an age appropriate manner leaving the knowledge of day to day expenses and bills out of the picture. The discussion undertaken with them should be such that they are not to blame themselves for the financial problems that arise; and that even though you owe money; they should feel confident that you will be able to take care of the tough times without letting it bother them. We have to let our children be children, and make sure that they're not saddled with the burden of economy and prevent ruining their gullible childhood.
Every child has to be intelligently and subtly educated about the value of money so that he/she can make wise decisions in the future. The best time to start this education is when your child is able to calculate and count. The best way to start this would be to fix a weekly or monthly allowance and condition the allowance according to their behavior. For example if your kid asks for money, you could ask them to earn it by doing some household chores like cleaning their room or doing laundry etc. This simple action will help them valuate the money he/she is getting.
Help your kid understand what budgeting of money means and how can it be helpful for him/her. Every person has a list of “needs” and “wants”. If we want to educate our children about the value of money we have to tell them to prioritize from their list of needs and wants. You should help your kid to understand that saving money will help him fulfill his wants in the future. A good way is to ask your kids to make their weekly budget utilizing only the allowance amount that they usually get and refrain from giving them more money apart from that allowance till it is very urgent.
When you give allowance to your child, try giving it in denominations that encourage savings. For example, if you are giving 5 dollars, give 5 1 dollar bills and encourage your child to put aside one dollar for saving.
Another good practice to help your kids appreciate the value of money is by setting up a bank account for them and educating them about how the value of money can increase with the interest they would receive on the money they invest.
Always remember that you have the power to create and mould your child’s financial imprint. Budgeting and saving is not taught in school, you have to be your child’s teacher as nobody else is going to show them how to succeed in life and avoid the huge financial pitfalls that lurk around every corner.