A good parent is not when their child gets a great job with a huge salary in a big company, nor when their child has great values. You are a successful parent when you imbibe good attributes in your child. One of the attributes is teaching the child about money management. They cannot spend as much money as they want and how much they want. They must understand how much money is important and how to save it.
You should give them allowance or pocket money at the basic level when your child is old enough that they will have to use for any expenses throughout the month. Give them minimum amounts as they are going to make mistakes where they might spend a lumpsum on something at the beginning of the month and compelled to go thrifty the rest of the month. Your child is going to talk about planning for the next month.
If your child has mastered how to use his pocket money, you can move to the next level, letting them know about credit and debit cards. Credit cards and debit cards are useful tools and can bring a lot of good when used smartly but can cause a lot of trouble in your financial life if not properly used. Starting with kids early and teaching them about credit cards and debit cards is best before they get one of their own and run into trouble.
It’s also good because once your kids finish their education, they may get away from you a college where they may need money from time to time. It’s also easy for you as a parent to transfer money to their account and keep a watch on where and how your kids spend money to make sure they do not get into bad spending habits. Even here it is advisable to be cautious and teach your children by getting them a debit card and then getting them a credit card.
Debit cards
When it comes to plastic money, debit cards are the simplest to manage as the money used is the amount you have in your bank account. A debit card can be obtained very easily by just opening a savings account which requires a minimum balance of INR 1000 to INR 5000. Now every month you can just transfer the required amount in your child’s bank account which they can spend.
Your child is now constrained to spend the money that you deposit and plan their expenses accordingly. It is also an excellent way to learn about interest and savings. Even if they use it as an ATM card to withdraw money, the withdrawal limit will be restricted.
Credit cards
Using credit cards is a bit tricky. Though financial management can get boring, it can be made fun if you look at it as a strategy game. Next, educate them about credit and credit limits, that the child borrows money from someone, and that they have to pay it back in the form of tasks that increase if they spend more than the credit limits that you allowed them to use. They are going to begin to stay under the radar and make sure they get out of their chores.
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