I often get questions from parents on how to teach their child about money? When is the right age for the child to expose to the money? What they could do to improve financial literacy? And the list goes on. My standard answer for this entire question is “Children of today’s age are already exposed to Money from the time He/She is born. Education and financial awareness/literacy are two critical thing which have to be nurtured regularly. But unfortunately our systems always give former the preference and the latter is neglected
If someone would have asked me the same question before starting this profession, I would be reacting like any Parent that money means discussing about banking, transaction, Investments, Money Management etc and would be in an illusion to shield child from aspects of money so that he/she focuses on his/her education, But in reality we would be shielding the child for earning, Investing and management aspect of money. As I am writing this article, I remember the famous quote from Mr. Robert books to all the parents “Intelligence solves problem and produces money. Money without financial intelligence is money soon gone”. If People still think that money will solve the problem, I am afraid these people will have rough ride.
Today Media is playing a very big role in creating financial awareness and the Generation - Y/Children’s are exposed to those. I, as a financial planner still feel that we should also expose our next generation on the four tenants of Financial planning - Income, Expenses, assets (Investments) and Liabilities (Borrowing) in a systematic manner. Right age to expose child to money management is from the day he/she learns to spend money. The day you give child currency to purchase a toy or chocolate, ask him / her to make a note of it. The Budget habit should begin from there
There are few things which I have been practicing with my son Ronak, who is 1.8 year old. When he completed 1 year, my wife made him sow seed in a pot and made him to water it on daily basis. She made it a regular practice every morning. Over a period he saw nurtured seed converting into plant. He now waters 2 plants. Firstly this is a good habit in all aspect. From Money training Perspective it will help me to explain my child the concept of nurturing wealth.
Last week, I happened to visit my friend’s place who is practicing CFP for past 3 years, I found a Piggy bank by the name Chocolate bank. When I asked my friend, what is it all about? He replied that, every time he gives chocolate to her daughter, she deposits in her chocolate bank. From the bank she eats chocolate twice a week. She observes Chocolate Pilling Up when deposited and reducing in numbers when withdrawn. He said this will help him to teach her daughter about the Funds Inflow and outflow in future.
One more Interesting concept I got to learn from my Client’s driver (Mr. Ramesh) was about goal based planning. I happened to visit his place one Sunday morning. When I visited his house to collect one important document of my client. I saw one Transparent Glass bottle (to be precise Old Horlicks bottle) in the Hall with few currencies. When I asked him what it is, he said this was his Son’s collection. I did not get it at first time, when I asked him the same question for the second time; he replied that the money available in glass bottle was his son’s savings. Since he did not want to spend on buying a piggy bank, he uses to save it in transparent glass bottle. When I asked his son, how did he managed to collect the money, he said that he used to deposit money which were given on festival season and other family occasion. Next to the piggy bank there was a cycle picture. When I asked the child, what is it all about? He replied that he was saving money to buy a cycle. I was surprised with his answer. I think if we all follow this concept we would be in better position to help our child in setting financial goals easily.
If the financial literacy is properly passed on to the kids, then over a period of time it becomes a habit and they start practicing by themselves. It is like planting a tree. You water it for years and then one day it does not need you anymore. Its roots would have gone down deep enough. Then the tree provides shade for your enjoyment.
Over the past 4 years as a financial planner, I have observed that children who were exposed to money management in child hood go on to become financially responsible adults compared to children who are shielded .Don’t shield your child, empower them. We all live in times of greater and faster change and if we empower people with right information/knowledge they would be taking informed decision and capitalize many bull and bear rally in next 25 to 30 years.
Do share your ideas on the same. It will be beneficial to the group
- Article by Nishith.B 
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