Wednesday, November 16, 2011

Children & Money – Can We Teach Our Kids about Finance & Money Early?

When was the first time you spent some money, on your own? Am not asking about when you earned it, am asking about when did your mom or dad or any of your elders give you some pocket money for the first time and what did you buy?

I remember a bit vaguely but I think I was around 10 or 11. It was ten rupees that my grandma gave me and I got those WWF Action Cards. The cards where Hulk Hogan was Rank 1 and Undertaker Rank 2. Those were the good days!!!

Coming back to topic, we all work; we all earn and want to set up a happy family. Family means having a wife/husband and most importantly “Children”. The arrival of a baby in a family is cherished by every couple and involves a lot of fun and happiness. Most couples start saving money for their children’s future, for their education, for their marriage etc. Well, this article isn’t about that… It is about a question that many of us may have thought of, "Can we teach our kids about Finance & Money early?"

Children & Money:

In India, children aren’t allowed to learn much about money until they are in their teens. They aren’t allowed to carry money by themselves and they don’t know much about money until their parents teach them. This article is about how we (as Parents) must teach our kids about money and its value/worth.

Every responsible parent has almost the same dream. A dream to provide the best education to their children. They want them to progress in every field, whether it is related to studies, sports, music or any other activity.

A child will be able to be really & truly successful in his/her life only if they have the financial knowledge and wisdom required to survive in the current competitive world. Experts say that children who learn about money and finance early in their life are usually better at managing their finances in future. A kid, who knows the value of his pocket money and knows how to save it, will be able to earn more and invest it efficiently in future.

Does the Indian Education System teach our kids Money & Finance?

Unfortunately, NO. The current school education doesn’t do much to impart the monetary wisdom to children. There is a pre-defined syllabus and all kids are expected to study and pass subjects in order to finish their education. And sadly those subjects don’t include anything about money or finance until they are old enough to learn about it themselves. Though it happens, it doesn’t happen at the right age and kids are left wanting for monetary education until they actually get some money to spend after they grow up.

Was the Indian Education System always like this?

Unfortunately, NO. Our ancient education system had many things to teach children about money from their elementary education itself. The children were supposed to complete their education in the ashram. For a complete education term, they had to work hard and in return, they were provided with education. During the final pass-out, students had to pay guru-dakshina (in other words fees) to their gurus (in other words the teacher) from their own earnings. This process was very encouraging for children as it made them partially financially independent.

Some Ways to Impart Finance Education to Children

Teaching kids how to save money and how to manage their money is not such a difficult task. Kids these days are pretty smart and sharp. They will learn it very easily, provided you are willing to spend some time with them, teaching them and nurturing them to learn more about money.

Some things you can do, to inculcate finance education into your kids are:

1. Teach children about money from the day they learn numbers and counting. Educate them about its importance through stories and games.
2. As children grow, they tend to demand more. Gradually teach them about the value of money. Tell them stories of your struggle and what difficulty you faced while started earning. Teach them about importance of saving and spending wisely.
3. A lot of demands by the children are not genuine. Teach them to understand the importance of their demand. Let them decide about the importance of a demand being need or want.
4. It is easy being impulsive and want to get anything your son or daughter wants. Well, that’s what fathers are for, but think before you buy everything. There may be things that are pretty costly. Use that as an opportunity to teach your child the value of money and explain them that need is fine but greed isn’t.
5. For their every requirement, provide a fix amount of money and try to give them a choice, so that they can select the one that suits them best, while saving some money. For example, if they want to buy shoes. Give them Rs. 500 for purchasing the shoes and tell them that whatever they will be able to save; they can keep it as pocket money. Your kid will probably keep aside some money and buy shoes only for around Rs. 400 or so. Having pocket money is cool, even for kids at school…
6. As children grow, start giving them allowances for their monthly expenses. Keep strict watch on how they spend it. Tell them to make details of expenses every month. If your kid can control his/her expenses well, reward them with gifts. Try to motivate them to save more.
7. Sometimes borrow money from children for their motivation and repay with some interest on the amount. This way, they will learn about interest and investment. They will be encouraged to save more.
8. If children ask some question about money, don’t just ignore them. Answer them for all their queries until they are satisfied. Groom them to use their mind as they grow and not just follow instructions.
9. It is very important to allow children to experience the loss and profit on themselves. The loss will increase their risk assessment ability, and profit will motivate for better performance. In case your child gets dejected in case he suffers any losses, you are there as the caring parent to motivate him. Cheer him up, take him out and teach him how to be careful in future.
10. When the kid is old enough to make a career choice, sit with him. Talk over the various earning opportunities in the career choices he wants to make. Explain him the pro’s and cons of choosing each career and ask him to take a decision after taking into consideration all the requisite aspects
11. Well, this list could be potentially endless. A lot of things are mostly common-sense. Remember that, your child’s bright future is directly dependent on how well he can save and spend money and that is entirely dependent on how well you teach your kid.

Our elders have had this opinion “Money can make children money minded, selfish, and even they can slip into wrong hands”. Unfortunately the saying or rather opinion isn’t entirely true. If money can so easily change your kid, what exactly are we doing as Parents? I am sure that, if you spend proper time and care on your kid, there is no doubt that your kid will grow up to be a noble and responsible citizen of this society. Teach him early about money and how to handle it, and he will be a successful person just like his proud mom or dad…

Happy Teaching folks!!!


  1. Hi anand,

    I like u r articles very much....At what age we have to start explaning about money....

  2. @ Anonymous

    Start around 5 or 6 years and tell them what money is and then slowly as they grow older, you can explain more details about money

  3. A very good advice, and parents should start explaining their children about money & its value.

  4. This sounds like an absolutely brilliant project for the kids - teaching them the value of money management. I hope it spreads not just at home but to schools as well.

  5. Wow! Good to know parents are teaching their children the value of money management. That's a welcome change, as most of the kids I dealt with didn't see the value of learning how to manage their money. This article shows, personal finance is a skill everyone can benefit from. Thanks a lot for sharing.

  6. It’s good to realize importance of money and how it difficult to earn money to the children so that it will help to parents as their children not asking very costly product.


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