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Teaching your child these important financial terms can help cultivate good financial habits and may eventually kickstart their savings and investment journey.
Teach your kids these financial terms today.
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Without burdening your little one’s mind with the complexities of money management and investments, it is crucial to introduce them to financial literacy and certain terms that would help them pursue economic growth and stability. Since your child’s mind is still developing and can’t grasp the deeper nuances of financial exercises, teaching them the basics is the right way to go. Here are seven basic but important financial terms that you can guide your children with.
Important Financial Terms To Teach Your Kids
Savings
Tell your child about money savings, which is a proportion of income set aside for future utilisation. Savings are an important part of financial management as they come to our rescue in difficult times, helping us prepare for sudden turn of events. Encouraging a child to understand the value of savings and why money should be preserved is a good start.
Asset
Your child should know about the term Asset. An asset is a precious holding that can be sold to generate passive income in the future, depending on your needs and goals. It is important to make your little one understand why prioritising assets can be beneficial.
Budget
Another simple but important term. A budget denotes the allocation of a certain amount of money towards a specific need. Be it your vacation, your expenses, or future investments, budgeting helps you attain financial discipline and have sufficient backup supplies available in case of emergencies.
Loan
A loan is a sum borrowed by an individual or an organisation from another individual or organisation. Educating your child about loans and debt as a common financial instrument is advised. Taking loans from banks for various needs and financial goals is a common exercise.
Interest
Once the loan is understood, it is also important to get a hold of interest as a concept. Interest is the amount that the borrower must repay to the lender, along with the principal sum. Banks offer different loan interest rates for different types of loans sought. Hence, it is advised to get educated about interest rates.
Tax
Many loans and investments fall under the tax income act benefits in India. Why, it is useful to also understand tax as a concept for beginners. Simply put, a tax is a portion of your income that you must pay to the government, which then spends that on national welfare activities and public benefit schemes.
Investment
An investment is the amount you put into acquiring assets that later help you generate wealth and passive income. Whether it is the stock market investing or buying real estate, it is important to have basic know-how about investments and how they can prove beneficial in one’s journey to secure goals and financial stability.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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Delhi, India, India
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