When you put away yet another unpaid bill in a drawer so you won’t have to deal with it… when you overspend using your credit card with no thought about how you will pay for it all… when you choose a house way beyond your budget and hope for the best while paying off your mortgage… do you ever stop to wonder where these habits have come from? Poor money management may have its roots in what we were taught about money as children.

It may seem farfetched but if you are parent (or plan to be one) there is no hiding from the fact that a child’s relationship with money is learnt – and largely from you, the parents and family. Today, bombarded by relentless advertising and peer pressure and surrounded by consumerism and greed, our kids can easily develop the wrong habits about how to manage money. If these habits are left unchecked, they could grow up into adults steeped in debt, delinquency, and other financial problems.  

Healthy understanding & respect for money are as important as other things in life. These easy-to-follow tips will give your child a solid foundation for making a lifetime of financial decisions.

Teach your child how to handle an allowance

Offering your child an allowance is his or her first taste of financial independence. Children can then begin saving, budgeting, and spending on things they really want.

Teach your child to open a bank account

There is no better way of introducing the concept of money than by opening an account for your child. Through regular trips to the bank to deposit or withdraw money, children will learn how banks work and how money can be saved.

Teach your child how to become a smart consumer

At every turn, children are tempted to spend money. From commercials to peer pressure, your child needs your assistance on how to make smart decisions and spend wisely. To do this, you could take your child shopping, but only when he or she has saved up enough to buy something and not just on impulse. You have to teach your child the importance of saying no. Not everything should be bought on demand. Teach children to compare items on the basis of price, quality, and brands.

Believe in honest communication

A lot of parents avoid discussing anything related to money in front of their children. This, in fact, contributes to a false understanding of finances. Another important factor is that both parents should be on the same page where values regarding money, spending, and saving are concerned, so the child is not left confused.

Lead by example

Finally, remember that children, especially young ones are very impressionable and most early habits are picked up by mimicking their parents. Spend wisely, save well, demonstrate the importance of frugality and budgeting, the odds are that your children will develop sound money management skills.