The best time to learn about the virtues of savings and investment is when we are young kids. What we learn as children remains with us for life. Moreover, today’s children are tomorrow’s investors. Thus, it becomes inevitable to teach them lessons of savings while they grow to make them understand ways to become penny wise and not otherwise. Therefore, this New Year 2017, you should resolve to make your children ‘cash clever’ for their brighter future.
A very crucial money skill to be learnt by everyone is the difference between needs and wants.However, for children, that can be a highly tricky proposition.In simple terms, a need is something that you must have to survive. It includes food, water, and a home. A want is somethings that is nice to have but you can actually live without. It includes an ice cream, a new skateboard, a new bicycle, or the latest Nintendo series.
You can use the story of Madeleine, the gold fish to explain the difference between needs and wants to your children. Madeleine is swimming in her bowl and it is time for lunch. Her bowl gets knocked over and she falls out. However, she is scooped back quickly into her bowl. The water in the bowl is not enough to soak Madeleine completely. In this scenario, what are Madeleine’s needs? She needs fish food to eat and some more water to swim in to survive. However, what is something that Madeleine might want? A little castle inside her bowl may be to swim through, but she can still survive without having one.
The moral of the story is that it is inevitable for us to spendour hard-earned money on the basic needs of life without which we can’t survive. However, we can exercise caution while spending on our wants. If you follow this approach, you will likely save money for your future, but if you spend heavily on wants, your long-term savings will take a big hit.
To educate your children about the difference between needs and wants, get your children to answer random quiz questions. Call out an item such as drinking water, chocolate, bed, TV, skateboard, or some other item and ask your child whether it is a need or a want. It is a fun way of making your children cash clever at home. Moreover, you can try this strategy at a supermarket or a grocery store. This would be a good way of letting your children know that vegetables are needs and sweets are wants.
Now that your children are cash clever, they would know they have to take care of their needs first before they start thinking about what else they want. The crucial thing cash clever children realise is that there is a price tag to every need or want and they might have to save up for it.