Financial freedom is on the wish list of everyone who understands its importance in living a fulfilling life. So often, we get caught up with just working to pay the bills, rent and everything else that enjoying life is left for a tomorrow that’s always still coming.
As a parent, financial freedom is the greatest gift you can give your child and we’re here to help you with that goal. Here are four things that you can do as a parent to help your child achieve financial freedom.
1. Help Them Understand How Money Works
Everyone who has trodden the path to financial freedom has taken time to understand how money works and the role that it plays in their life. Of course, to say that it just buys you things is like saying that cricket is just hitting the ball with a bat. It negates the skill, strategy, and work that it takes to be good at the sport.
You can help your children with financial literacy by talking to them about the basics, introducing them early to the concept of finance and encouraging them to read books and watch movies/documentaries on the subject. This will help them see through the “transaction” aspect and beyond, laying the foundation for a greater understanding.
2. Inculcate Habits That Will Help Them
Great parenting is so often just inculcating the right habits. Teach them the value of saving and investing very early with a piggy bank. Be precise with the pocket money that you give them and make sure that it is neither too much nor too little. Encourage them to create a budget for their expenses and teach them how they can save more.
These habits will give shape to their financial mindset that is going to help them achieve financial freedom. Create a bank account for them when they are eligible and get them excited about the financial institutions such as equity markets and their functioning.
3. Do Not Burden Them With Student Loans Or Other Debt
Financial independence is surely a scalable path but any kind of debt means that your child is starting the race far behind everyone else. Good education always comes at a considerable cost and student loans seem like the easy way out, but they often end up being the reason why young graduates stick around in unfulfilling jobs. So what’s the better way?
Early planning on your part can help save your children from this kind of debt. With the use of platforms like EduFund, you start investing early for your child’s education. This way, it is neither a burden on you nor on your child. An education cost calculator can help you find out how much your child might need for a good education and help you plan things out.
And only in the rarest of situations, if you still happen to fall short, you can opt for student loans that don’t burden your child entirely.
4. Be Their Financial Role Model
Your children learn things by looking at you tackle life. The easy way of teaching them the art of budgeting would mean including them in the conversation when you sit down to budget. Similarly, show them your investment portfolio, show them the kind of diversification you are hoping for and why.
Tell them how much you save and why. Answer their curious questions patiently. Tell them why you could buy that new car but why you wouldn’t (right away). Teach them about debt and when it is good and when it is bad.
When your children grow up looking at you as their financial role model, they will try to replicate those same habits and that would help them achieve financial freedom.
The topic of financial literacy has been gaining footing in the global dialogue for a while. It is not such a taboo subject anymore given the rise of the millennials and their financial leanings. If you have children or are planning to have children anytime soon, make sure you familiarize yourself with the topic of financial literacy today.