Money Lessons the Hard Way: Why Kids Need to Make Financial Mistakes.”

Whether it’s about money, morals, or life, it’s a universal reality that kids learn more through doing than from listening. This is why parental instructions and suggestions frequently go unnoticed, even if their actions and behavior have a lasting effect on children’s lives. Giving kids the opportunity to make decisions on their own, decide for themselves, and learn from their mistakes is another effective teaching technique. Your child will learn more quickly from their mistakes if you let them manage money and make their own decisions about how much to spend and save.

Even if it seems odd, yet there are some financial mistakes that can give your children invaluable life lessons. They can learn from these mistakes and become more responsible and financially wise. Here are several financial mistakes that children should avoid, with your guidance:

1. Spending the all of their allowance:    When you give your child a monthly allowance, let him or her spend as they wish. Let them be if they spend all of their pocket money in the first week. But be mindful not to give them more money for the rest of the month. They will quickly learn how to stretch their money farther. One mistake of impulsive spending will teach them many important lessons about the value of budgeting, prioritizing spending, and resisting the drive for instant satisfaction.

2. Borrowing and Lending:  As a parent, allow children to loan money to their friends and let them feel disappointment if it is not returned. In the same way, if your child needs a loan from you to pay for a costly item or complete a larger task that their monthly allowance does not cover. Giving money to them is okay as long as you put restrictions on it, such as a time limit, interest, and penalties for late payments. They will learn how to manage debt and the importance of repayment thanks to this.

3. Investing Mistakes: If your teenage child is interested in investing, let them try it out. Make sure to explain how these investing options work as well as their advantages and disadvantages, but let them make their own decisions. Through this, kids will get familiar with market volatility and learn important lessons about risk management and the value of research.
4. Losing Money: If by any chance kids misplace or lose their allowance or a gift of cash, as a parent we should avoid the impulse to replace it immediately. This can teach them about responsibility and the consequences of not keeping track of their finances.

Conclusion:

Allow your youngster to fail as many times as necessary to learn valuable money lessons. Not only will they learn to handle their money carefully, but they will also develop lasting habits that will help them when they starts working as an adult. The key to allowing these mistakes is to give guidance and encouragement all along the way. 

Nivesh Ki Paathshala is always there to help you out if you need us. In case if you have any questions, you can respond to this email, and we would be happy to connect with you.