Money Management Financial chronicle 21 march 2015

As children grow up, the concept of money and finances play

a big role in their upbringing. As they enter college, children are expected to know basic concepts of

money such as saving, using cheques, operating bank accounts, etc. Since this is also a time when

grown up children start expecting pocket money to take care of their various expenses, and start

spending on their own, and maybe even take up a part time job, it is important to ensure that they are

aware of the various aspects of finances.

This is the ideal time to teach your child how to handle

money, and to make them understand the importance of

savings and investments.

One of the best ways to do this is to talk to them; explain

various aspects of savings and spending. It is also a good

idea to give them some money each month as 'pocket

money', and tell them this is for all their expenses such as

eating out, going to movies, etc. This will help them in

keeping a tab on how much they spend and how they can

save, as this will be their 'own' money as compared to their parent's money.

5 money lessons parents should teach their Children

Feb 26,2014| Source: Rediff.com

1. Making a budget

Ask your children to make a budget which includes all their income (i.e. pocket money and any money

from part time jobs) and spending. This allows them to understand cash flows, and what their actual

expenses. This will also ensure that your children will have more money at the end of the month as

well as a better understanding of managing money, if they follow the budget.

You can sweeten the deal saying that if they follow the budget strictly for six months, you will increase their pocket money by a certain amount.

2. Earning money

Another idea to ensure your children understand the importance of money is

to make them earn it.

For example, apart from the pocket money that you give them, a monetary val-

ue can be put on various chores they do, such as Rs 50 for cleaning the car, or

Rs 75 for dusting the house, and so on. This will teach them the value of money

and ensure that they will not squander away their hard earned money.

3. Wants versus needs

Make sure your ward is able to differentiate between their wants and needs. It

is important for your children to know the difference between needs and wants

and they should also know which to address first.

By knowing how to spend on their needs and wants accordingly, they can save the money systematical-ly for their future. For example, spending on food is necessary whereas spending on party or expensive clothes is a want.

4. Keep them aware of loans

If your child has taken an education loan, let them know the principal amount and interest they need

to pay after completing their education course. Discuss the loan in detail with the child, including the

collateral (if any) put up, the repayment schedule, and the importance of paying back the loan. This

will ensure that they live within their means while studying, as well as taking their studies more seri-

ously in order to get a good job and repay or at least help repay this loan.

5. Credit cards

You can get your children an add-on card, which can be used for emergen-

cies. However, the recent trend is that children expect to get a card once they

are in college and want to use it to buy several things that are not necessary.

Giving your child a card should go hand in hand with an explanation that the

card is to be used in emergencies only and not otherwise; and since it is an

add-on card, you can monitor their usage.

This will give your child the financial responsibility of having a card and knowing how to use it, and stand them in good stead later in life.

Key Takeaways:

Give your child pocket money and explain

the importance of savings

Ask your children to prepare a budget so

that the pocket money is not spent on un-

necessary things

Teach your children to know the difference

between their needs and wants

Pay them for chores -- so they learn what it

is like to work for money (i.e. get a job)

Jan 19,2015 | Source: :Economic Wealth Help your children be-come responsible with finances

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