Like many things, habits take great time and effort to form. Therefore, in order to teach someone about the good habits of fiscal responsibility, it is best to start them off young. Here are some great and helpful tips to help you ingrain the importance of financial independence in your children:
1. Be a role model
Children have very inquisitive minds and they learn from what they see, hear and experience. As financial independence involves some element of frugality, you should start teaching this principle to the child by practising what you preach. As much as possible, stay away from excessive and unnecessary spending, and this will eventually rub off on your child.
2. Teach your child to live within their means
In order for your children to experience dealing with consequences (financial ones or others), you need to show some tough love. Give them a fixed amount of pocket money and no more than that (that goes for advances too). Teach them how to allocate their expenses and not to spend more than what they have. If they really do go overboard, then they will have to deal with the consequences of not having enough money. Hard lessons while painful, can be very effective.
3. Open a savings account for your child
There will come a time when your child is old enough and have saved a substantial amount of money – enough to open a savings account. Help your child with the process. This will teach them the basics of financial knowledge, such as interest rates and returns. At the same time, it would make saving more fun because of the sense of accomplishment that comes with seeing one’s savings grow.
4. Teach your child about borrowing and lending
Borrowing and lending are simple lessons, but it seems that many people, including adults, often forget the value of either. That’s one of the main reasons why some people run up large debts and even engage in illegal moneylending business. Teaching your children about the principles and consequences of lending and borrowing will help condition them to think twice before taking or giving a loan.
5. Bring you children for grocery shopping
Grocery shopping may seem like a mundane thing, but the truth is that there is more to it than meets the eye. By bringing your children along for your grocery trip, you can introduce them to the reality of the cost of living. At the same time, you can practise responsible buying so that your children can follow suit and learn to buy reasonably within their means.
The economy is vulnerable to many factors and this will affect earning ability as well. Thus, financial independence is important to ensure that one is able to stay afloat during hard times, amongst many other things. It might take some time to inculcate good practices, but the payoff is always worth it.