Should you offer financial aid to your children now or let them wait to inherit? Once my father offered one rupee each to my elder brother, myself and my younger sister to spend for anything of our choice in the fun-fair in our neighborhood school.
When we returned home in the evening, my elder brother gave one rupee back to my father saying that you need this money more than me at this moment.
My younger sister gave back half the amount saying that while enjoying at the fun fair, I also thought of you.
I being the spendthrift, spent the entire amount within 30 minutes of my entry and became sad for not having anything further to enjoy with.
During my school days, this is a wonderful lesson I learned from my brother and sister on that day, money management and money matters.
Whatever amount we may have in hand, we should know how to manage it effectively, priority wise.
There are always more months ahead at the end of the money than there is money at the end of each month. We must find out how to manage our money systematically, to save for our college education, family life and retirement thereafter and this can be done only with proper financial decisions.
Today, my brother is a successful chartered accountant in the major city. My sister is a pediatrician, and I’m here, writing my eBooks and novels and designing web sites for the global market. You can imagine how the childhood thought process moulds our mind and directs us towards our destiny.
It is a debatable point about the quantity and quality of allowances or the financial aid to be offered by parents to their children. It’s hard to teach children about money without using allowances, but sometimes parents decide not to have allowances because they are a hassle and kids are never satisfied. The dads must research as how to make an allowance system work for their family. However, most dads I know use the allowance system to teach their children the value of money and it seems to be the finest way, like it happened in my case.
I personally feel that there is need to offer financial aid to our children in terms of pocket money. But there certainly is the need to teach them how effectively they should utilize the finance in hand and the value of it, how money saving will help them in the event of crises. In my opinion, it is worthwhile to teach children how to make one million dollars rather than giving them one million cash in hand.
There are several important things children can learn from having money in hand and how much it is worth to them. It is hard for children to put in perspective the relative worth of things. They must understand the relationship between having money and the responsibility for its use. If they buy something at the shop today with their precious amount in hand, it means it is important for them and they enjoy the process of impulse buying than something else they may require in future.
I know and met many committed fathers who hate allowances when they learn that their children waste money on something frivolous. But, we also know the fact that children learn by mistakes and also repent on the consequences for their actions and carelessness. There are two aspects the children should learn and think about, whether saving is for something important or just for the rainy day. Receiving financial aid and learning from parents how to save it and for what reason to save will help children all their lives.
The children should be educated at their tender age of below 10 years, the importance of discipline with money as they can make mistakes with ten dollars now and learn the process rather than learning with the use of their credit card in college and get entangled in the financial crisis with debts.
Now, the basic question arises as to what is the cost of teaching our children the value, price and the color of money and the best way to use them, how much, when and how it should be done. The general opinion is between their ages of 5 and 7, at which age most of the children are mentally ready to handle the small amount of pocket money. Understanding the principles of its best use, will help them with larger amount in future.
How much amount you should pay initially depends entirely on your family financial status and circumstances. Some children select the clothes of their choice and pay from their pocket money, some prefer to buy books or others collect sports goods. It is certain that you should not pay more in pocket money than you can afford to lose.
After all, financial aid is a must for kids to begin their journey in this material world. This is done with our heart to ensure their progress in financial safety and security in a future when we will be old enough and in a position to say that we can do nothing to help you.