When should you start talking about money to your kids?
06 May, 2017
“Teaching kids to count is fine but teaching them what counts is best.” —Bob Talbert, American columnist
This quote forms the very heart of the philosophy behind teaching financial responsibility to children. From an extremely early age, parents and teachers focus on schooling their children with math and other skills that are said to be utilitarian in their future. In this ever so competitive world, four year olds are being enrolled in puzzling and difficult classes so that they get a head start in life but amid all this training, we forget to impart an important life skill—financial literacy.
How many of us realise that when our kids enter the real world, the first thing they will encounter is money? As a wealth advisers, we have seen that when it comes to money, smart people commit blunders, whether it is in dealing with banks, taking loans or making investments- all due to lack of information or simply because they are unaware.
This is the reason one should begin teaching money management to kids at a very young age. It is known that the most receptive years for learning and grasping in children are between 5 to 12 this is the best time to introduce them to savings and teaching them the importance of financial matters. We must add though, that even if your child has crossed the age of 12. Although, it must be added that even if your child has crossed the age of 12, it’s not too late but a little more effort may have to be taken as they might have already developed deep-rooted habits and turned into consumers. The solution here would be to guide them through the use of examples that are interesting to them. As they enter teenage, they become hardwired because of peer pressure and their external environment, making it difficult to get them to follow a financial awareness plan. At this stage in their lives, they are keen to buy the latest mobile phones, gadgets, branded clothes and do things that their friends are doing. Telling them to act sensibly and responsibly might be a tall order if you have not infused good money habits from an early age. In fact, there is a growing need to introduce financial literacy as a subject in school from Class 1 itself.
Many of you probably give your children pocket money, but what you don’t realise is that this does not teach them the value of money or how to manage it. Most parents do not take the initiative to teach their children about money. They might touch on the concept of piggy banks and savings early on, but are usually reluctant to discuss money and family finances with their children. In India especially, money is a touchy issue, and in terms of discussing sensitive topics, ranks as high as sex education. The best way to teach kids about money is to let them deal with money early on for they need to understand its power and the consequences of their decisions.
It’s far better that they commit mistakes at a young age with smaller amounts of money than financial blunders when they grow up. By starting early, you can give your children a strong competitive edge for their future financial success and make them responsible for their financial actions. The key learning points for kids should include having healthy values about money, setting goals and priorities, making prudent choices, delaying instant gratification and understanding the virtues of hard work. Also, always keep in mind, that even though you might not teach your kids directly, they are learning by observing your every move.