Children learn more about finances from their own parents than any other source, according to a recent study which makes it integral for the parents to give practical exposure and knowledge of money and how to be financially secure before they become adults.
Financial socialisation is the right term used for this process in which parents impart this financial planning knowledge onto their children.
The study carried out in the Journal of Family Issues, suggests that parents can give hands-on practice to their kids with money in a lot of ways. Some of them include giving their regular allowances, paying them for duties beyond their normal routine chores, rewarding marks and grades with cash, giving cash on special occasions, and encouraging them to save for special occasions and donations.
It is not a good idea to hand them over credit or debit cards as the value of money can only be realised through real cash. Another important thing is to give the gives a monetary value according to their age and not less than or beyond it.
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The best way they can learn is by making mistakes, so make sure that you do not get harsh with them or strict. However, you need to help them develop the right monetary habits before they become independent.
Ashley LeBaron, the lead author of the study along with others interviewed around 115 participants that included 90 college students between 18-30 years, some parents, and grandparents. They asked the students how they learnt about money and asked the parents and grandparents how they taught their children about money.
A majority of the students said that they received some experience and knowledge in their youth which they found to be extremely helpful. Those kids who were not given the knowledge felt inferior and wished that they were taught about it earlier.
The three most commonly identified reasons for parents to teach their kids financial management in their childhood were efficient financial skills, appropriate financial values, and monetary independence.
(With inputs from ANI)