Raising a child requires a
lot of effort, time and planning on behalf of the parents.
Across various age-groups of the child, parents need to
learn and understand to cater to their specific needs.
It is in the formative years of the child that parents
can influence & streamline the learning cycle.
It has been
already proven that children should be introduced to money
at an early age. However, the method in which a 5 year
old will be taught about money will be very different
from the method for a 10 year old!
adopt simple ways to teach children about finances. In
fact, the entire “money–learning’ process
must slowly be integrated into their informal education
process. The following learning tools can be used for
children of different age-groups:
– groups 1-5 years
Children get gifted with money in families from an early
age. Hence, parents should make a piggy bank for the children
and deposit this money. They should also introduce children
to various denominations of coins & notes. Children
usually find these interesting and hence attention can
be easily drawn to them. Parents can even help children
learn counting using these tools. The money collected
in the piggy bank can be periodically used to buy gifts/
toys for the child. Parents must remember to create an
association between the piggy bank and the gift so that
the child understands that something from the piggy bank
‘ money’ had to be exchanged for the toy/gift.
also open a savings account in the child’s name
to ensure that formal saving and investment happens for
- groups 5-10 years
Children usually start going to school at this age and
they need little allowances to use at canteens, etc. By
this time, children are aware of something called ‘money’.
Now parents can formally start giving small amounts like
Rs.10 to children to buy pencils, comics or even chocolates.
Also, parents can start sharing about the ‘child’s
bank account’ with him/her simply like:’ we
are collecting money for you in the bank and how this
money will be given to the child when you grow up’.
grow up, their allowances can be slowly increased. Better
still, children should be encouraged to actively participate
in household chores by giving them monetary incentive
for doing some work. For eg: if the child cleans his/her
room or helps you in house cleaning, extra allowance must
be given to the child. This will not only inculcate positive
work values but also help the child appreciate that money
is not freely available and requires some amount of hard
work to be earned!
rewards to children for excelling at academics can be
monetized and linked to examinations. A penalty could
also be levied to drive home the importance of hard work
to earn money
Age - group 11-15 years
This is the trickiest age for children since they start
believing that they are adults now and need to be dealt
like one! In this age-groups, children are more aware
of their environment and surroundings than parents understand
them to be. Their opinions and desires are largely governed
by what their friends & colleagues in school adopt.
They want to be part of the ‘ happening crowd’.
assumes greater heights in this age-group. For eg: parents
may often be faced with a situation where the child wants
to buy a very expensive game/doll just because his/her
friend has bought it. Parents need to explain to children
why/why not the gift can be bought . Maybe the purchase
of the gift can be linked to the child’s excelling
in a particular field as desired by the parent. At this
stage, parents should formally start giving ‘pocket
money’ to children which is a fixed sum per month
and define the goods that children need to fund out of
of savings, spending, income, interest must also be introduced
to the child at this age. These values inculcated at an
early age will help the child grow up to a financially
– group 16- 18 years
At this stage, children are becoming adults and hence
need to be given financial responsibility. For eg: they
must be involved in the regular decision making in the
house as well as in the discussions about their own future.
If the child wishes to go abroad for further education,
it involves huge financial outflow and the child must
be made aware of family financial limitations if any.
be formally introduced to handling their own bank accounts
and ATM/debit cards. The concept of credit cards should
also be introduced to them. The ‘pocket money’
concept should evolve to a higher level of financial independence
even encourage children to do part –time jobs during
holidays/ breaks to understand the ‘hard work that
goes into earning money’!
As parents, it is your responsibility to ensure that your
child is a financially responsible person. Proper financial
education forms a part of the parental guidance required
during the formative years of a child. We must be conscious
of the importance and start early to ensure that we do
not miss the bus!