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How to have money conversations with children

Having conversations and communicating effectively about money is a difficult task for adults, let alone trying to make sense of it for children. Nevertheless, setting a sound money foundation should begin at an early age, that’s how the inhibition around money discussions will reduce.

Having conversations and communicating effectively about money is a difficult task for adults, let alone trying to make sense of it for children. Nevertheless, setting a sound money foundation should begin at an early age, that’s how the inhibition around money discussions will reduce. Without inhibitions, as children grow to become earning adults, they will have the ability to not only understand money better but also utilise and communicate about it in a gainful manner. 

Talking to your children about money matters can make them less fearful and more efficient in money management; an early leap towards financial security and independence. 

Here is how you can think about starting money conversations. 

Don’t be shy to tell your children that everything costs money. Right from education to clothes, food and toys come at a cost. For you as a parent to be able to afford this cost, there is an income that you earn. That income comes from working hard and only if that happens will you be able to afford ‘things’. 

1. Build awareness

Don’t be shy to tell your children that everything costs money. Right from education to clothes, food and toys come at a cost. For you as a parent to be able to afford this cost, there is an income that you earn. That income comes from working hard and only if that happens will you be able to afford ‘things’. 

Children are not born with the awareness of money or what it is. They see things around and it’s taken for granted. Don’t assume that eventually they will understand, rather show them how things cost. Every once in a while, take your children for regular vegetable or grocery shopping, hand them the money and let them pay.

Talk to your children about the cost of basic utilities like electricity and phone, talk to them about taxes as a cost for public utilities. These are simple conversations but essential to understand the utility of money. 

2. Build responsibility

The awareness about what money means will take time to build. Along with utility, you can also show them that money enables you to afford entertainment and fun. At this step, things will start to get a bit more complex. It is always going to be easier to spend more on fun than on utilities, however, building that balance is important. This is when you should start talking to them about responsibly spending money; making sure that there is a balance between spending on utilities and fun.

Many parents give their children pocket money to help them gain a practical understanding of spending money. This is a good practice. You can take it a step further by letting them utilise the money towards some responsible spends like buying their own stationery and some towards fun, like buying toys or candies. 

Its never to early to start having money conversations with your children and it’s required that every now and then you tell them that something is too expensive or unaffordable. This will not only build an awareness but also create an aspiration to work hard towards sustainable wealth once they are adults.


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