Managing your money is as difficult as earning it. So it’s always good to teach your child about earning and saving early. But using the financial jargons like stock loans and investing would not bring the desired results. It has to be done in an interesting way and should be made a funfilled experience. Here are some tips:
Playing money – Educating kids through games is always a better option. You could teach your child about money management either through board games, PC games or even online games. Parents can interact with children over a game of Monopoly. This can be a productive yet a leisure-filled way of spending an evening together.
Monopoly is all about collection and payment of rents as well as buying and selling of property. If your child is net savvy you can even play this game online, which comes with tokens and property auctions as in the real game. Another game is ‘The Game of Life’. A board game, it also has an online version. The main objective of the game is to opt for a lucrative career by getting the highest salary and sign off with a high net worth.
At the start of the game you have an option to chose between career and college. Then it covers other important milestones in a person’s life like marriage, buying a house, investments and even insurance. You are declared a winner if you retire as a millionaire without any pending debts. There is an option to gamble in this game, but that carries an equal risk of loss.
The uniqueness of this game is that the child actually thinks long term and gets a sense of ups and downs in life. This also becomes a good learning experience by using the trial and error method.
For the internet addicts there are several online games. A popular one is ‘practical money skills for life’ (http://www.practicalmoneyskills.com/english/resources/games/), which is a collection of six games.
The first one is Financial Football, which is a quiz style game packed with finance themed questions. The second game is Countdown to Retirement where you key in the career and lifestyle of your choice and you will know if you would have a comfortable retired life. The third one is Ed’s Bank which is all about how you manage your pocket money. Then there is Road Trip to Savings which requires the child to make decisions about income, expenses and savings on the way to financial stability.
Different approach for a growing child – If you have a young adult at your home, and if he/she has grown out of such games, you can try some real life techniques. If your child wants the latest bicycle, just don’t go and buy it. Ask the child to save money every month from his/her allowance. Then set a target that if he/she needs a bicycle at the end of six months how much would he/she have to keep out every month to reach that target.
If he/she reaches that target at the defined time, then you can reward your child with a one-time bonus which incentivises him/her to save even more.
Get over the piggy account – Another way you can impart financial education to high school or college kids is by opening a bank account on their name. Most private sector banks like ICICI Bank, HDFC Bank, and foreign banks like Citibank and Standard Chartered Bank offer accounts for kids. Usually, the minimum deposit amount is Rs 5,000 and you can transfer the monthly allowance to your kid’s account. It helps if you have a savings account with the same bank.
Like any other savings account, even this one comes with a chequebook and debit card. Usually debit cards have withdrawal limits of around Rs 500 per day, but this may vary from bank to bank. Also you can set mobile alerts, which would allow you to monitor your child’s spends.
It’s not just about policing your child. Such games or techniques help your child to be more prudent with finances. This is particularly essential today as youngsters walk away with huge pay packets. There are even more tempting avenues for them to splurge all the hard earned money.