The freedom fund is an important financial tool that gives you the power to become financial freedom. It is a fund for emergencies, saved from your salary after taking care of all your financial obligations.
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Children learn and understand the world around them by imitating their parents and people present in their proximity. Children depend on adults to form an impression and develop an attitude towards different things in life. The habits cultivated in the early years of age as a child remains throughout an individual’s lives.
According to a survey by the University of Cambridge, children start developing financial habits by as early as 7 years of age. Teaching your kids healthy financial habits from a young age is as important as teaching them healthy eating habits.
Most of us in the early stages of our economic productivity tend to live a carefree life. We spend our earnings to buy things we’ve always longed for which is not very healthy in the long run. Parents should focus on transforming their children’s life by giving them correct knowledge and appropriate financial advice in the early years.
The list of tips below will help you to guide your children to become early investors.
Usually educational institutions primarily schools do not teach the nuances of financial investments. Before stepping into the world of financial investments young investors should be well aware of various about the vagaries and behaviour of the market. Financial matters should be discussed with children as an attempt to develop a sound understanding and knowledge of how the market in real-time scenario works.
Financial experts and psychologists consider teenagers and people in their early twenties highly prone to the risk of overspending. Teenage and young working professionals often tend to overspend due to the increase in per capita income, easy access to credit and banking facilities.
According to a recent survey by a finance-based company nearly two out of three working professionals in the age group of 21- 25 rely on their parents for seeking financial advice. As parents, it is our responsibility to make our children realize the importance of spending in a limited budget and saving regularly for their futures.
Children often start throwing tantrums to convenience their parents for buying something they want. Instead of getting convinced in front of your child’s demand encourage them to wait for at least a day before they can purchase anything above AED 50. This will help them to inculcate the habit of prioritizing between needs and demands and help them to save realize the importance of healthy financial habits.
Apart from emphasizing healthy spending habits, it is also vital to control the amount of money you hand to your kids. The best approach of doing this is to pay small amounts of money as commissions for their effort in day to day jobs like cleaning their rooms, taking out the trash, cleaning the car, etc.
It might appear to be a harsh approach for children but in reality, it helps them to realize that money is earned by hard work effort.
Children learn and understand the world around them by observing and imitating adults. As parents setting examples of healthy investments will help the child to develop healthy habits for their futures.
The clear jar approach is one of the best ways to set examples for your children. When you put money every day in clear jar children can actually witness it growing in front of them. Discuss the importance of savings and investments with them which will encourage children to save money.
Let your children make their own financial decisions even they make mistakes and tend to overspend and waste money. Doing this will help them to learn several valuable teaching centered on wise spending and savings.
Wrapping it up!
Right from introducing the concept of money to make their first investment decision the article sheds light on various tips that will help you to guide your children to become early investors.