- Date : 02/06/2020
- Read: 4 mins
With all the learning your kids are doing during the quarantine, make sure to teach them some essential financial habits too.
As a mother, you may have noticed that it doesn’t matter how often you advise your children. They learn more from what you do rather than what you say – whether it’s eating the veggies on their plate or brushing their teeth before bed. Picking up good financial habits and building a healthy attitude towards money are no different.
Now, during the coronavirus lockdown, you and your family must be adjusting to a lot of changes as you work from home and your children have classes online. Your finances and expenses would be undergoing upheavals as well, and with all the time that you and your kids are spending together at home, it’s a good idea for you to take the effort to pass on some good financial habits to your kids.
1. Budgeting for essentials
While budgeting forms the base of all personal finance, the pandemic has made it even more essential. If you have suffered a pay cut or your salary has been deferred, your income would have reduced. This could have made you more conscious of your budget; you might have reduced your discretionary spending and focused on groceries, rent, utility bills, etc. The next time you work on your budget, it would be wise to sit your kids down and take them quickly through the process so they understand the importance of budgeting and how to deal with a financial crisis.
2. Spending on needs, not wants
Children are observant; over the past few months they would have noticed that eating out and shopping have become non-existent. Yes, the lockdown made those things impossible, but now as the situation relaxes and things start to go back to normal, you may still want to stay away from such discretionary expenses and focus on your financial needs rather than wants. It’s important that children, from a young age, learn how to differentiate between their needs and wants; watching you manage household expenses can be a good start. For instance, when it comes to groceries, things such as foodgrains and lentils are needs, but gourmet ice cream is a want (and hence an avoidable expense).
3. Creating an emergency fund
Financial anxiety follows every crisis – whether it’s a pandemic like COVID-19 or political unrest. This is true for personal crises as well, such as losing your job or your car breaking down. So, it is crucial to have an emergency fund that can see you through 6–9 months of expenses. It’s not uncommon for children to pick up on financial anxiety, maybe from seeing their parents at home instead of at office, or hearing something from their friends. Explaining to them what an emergency fund is and how it can help during such times will enlighten them and put them at ease.
4. Investing your saved money
Investing money is like making money work for you, and is probably one of the smartest financial decisions you can make. Even during the lockdown, investing in certain financial products such as SIPs and digital gold can be a great move. Explaining to your children the concept of compounding and how to grow money through investing becomes very relevant at a time like this. They will see how investing is an integral part of handling money and that it’s always a smart move regardless of what’s going on in the world.
5. Helping the community
Even in normal times, donating to charity or supporting a cause is a good thing to do. It’s a great way to help society at large. But at times like these, when so many people are facing a number of hardships, supporting the community is even more important. Your children should learn this and build the basic values of humility and kindness, while being grateful for what they have. So involve them while choosing a charity you’d like to help so they can feel personally invested in it.
Teaching your kids the importance of these financial habits during a time like this will have a greater impact and ensure they never forget these lessons. These financial pointers will prove to be helpful throughout your children’s lives and will go a long way in the kind of decisions they make and the lives they live. Check this 7 Fun ways to keep your children engaged during the lockdown.