Involve Children In Big Decisions

Big spending decisions isn’t a cakewalk. From buying a property, investing in your kid’s education to taking a vacation abroad, any big financial decision requires you to take into consideration several other expenses, budgeting, and saving at the same time. And, as parents, you sometimes end up asking this question to yourself ‘Should children be also involved in planning big-ticket investments?’ 

 To begin with, yes they should be. However, it becomes tough for you to decide where to start and what information to share with your kids when it comes to discussing money matters. But, it would be prudent that children are taught about financial independence as well as financial responsibility from a young age. The best way to do so is to involve them in the family budget planning or big spending decision-making processes. Let’s look at some of the ways on how to expose children to the process of financial decision-making. 

 Talk about money value: It’s true that at an age of 5 or 6 your child may hardly understand in-depth money lessons. However, don’t hesitate to involve them in family finances and teach them the importance/value of money in our day-to-day lives. Plus, you must tell your kids how you plan your expenditure and savings for a month. For instance, at the beginning of the month, brainstorm as a family what expenses are necessary and what is not. You can also show them your monthly bills, say, for electricity, and explain where the costs come from. You can also take their suggestions on ways to save electricity  bill. As a result, these will help them build smart spending habits as an adult.  

 Savings goal: Set a family goal such as a trip to an amusement park or buying a car, and draw a savings progress chart along with your kids. Keep a weekly or monthly track of your budget and show your children the progress you are making in terms of saving to achieve the goal.  Also, explain to them how you are planning to reach the goal, maybe by cutting back on restaurant meals, and why it is worth doing. Moreover, in the age of instant gratification, it is necessary to make children realize the need to save up to buy their dream purchase. This way you will be able to instill in them the discipline of saving that will play a vital role in lifelong money management.

 Let them earn some reward: You can encourage your kids to earn rewards by completing an assigned task such as helping you arranging the dining table for lunch/dinner or making their beds. Once they earn the reward, discuss with them possible ways to use their earnings - whether it’s for an immediate goal such as having a pizza or a longer-term target like buying a playstation. You can also encourage them to set aside some money for donation. These activities will give them a first-hand experience of how to manage money and ingrain good money habits that can last a lifetime. Simultaneously, it will further help you understand their perspective about spending as well as saving, thereby building their confidence in money matters.

In a nutshell, keeping the above-mentioned ways in mind, you can teach financial wisdom to your kids that will play a beneficial role for them lifelong.

 The author is Co-Founder of Junio 

DISCLAIMER: Views expressed are the author's own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.