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Last Updated : Nov 18, 2014 02:25 PM IST | Source: Moneycontrol.com

5 Things to teach your child about money

With the world becoming a smaller place today- with internet, mobile being accessible to even the pre-teens. When we asked a group of 100 students studying in the 11th grade how many of them bought things online- the response was 100% of them did.


Lovaii Navlakhi
International Money Matters

With the world becoming a smaller place today- with internet, mobile being accessible to even the pre-teens. When we asked a group of 100 students studying in the 11th grade how many of them bought things online- the response was 100% of them did.

The next gen is getting technologically savvy even at the ages of 2 and 3- with smart phones and tablets at their fingertips and them accessing apps like they were naturals at it. With students being technologically savvy, the immediate concern is are they financially savvy – Why? Because the two are interconnected. If they are buying things online, they should know if the payment gateway is secure, they should know the basics of using credit and debit cards. They should know the maximum amounts they should spend, the card details not to be divulged to anyone etc.

Apart from these, they should also know that money is a limited commodity, whereas desires are unlimited. They should learn to prioritise and spend money judiciously.

5 things to teach your child about money:
1. Prioritizing: Help them with this skill. Yes, prioritizing is a skill today, when everything is on sale, everyone has new things to show off and with peer pressure being almost the single most factor which impacts kids. You will need to prioritize things for yourself first, ask for their help and them you can help them with their lists. These can be anything, a shopping list, a reading list, your bucket list- anything. Demonstrating this skill is more important than the item you are discussing.

2. Needs vs Wants: We cannot emphasize this enough. The child has to know the difference between the two, period. How you can demonstrate this is by either doing this need vs want differentiation for yourself or prepare a dummy list for you both to work on. The best example for me on this topic is when we go for a holiday. You can take only the essentials you need for this trip irrespective of how many things you want to take.

3. Saving and investing: If you are not yet giving them pocket money; it is time you started. Start with a small amount- ask them to keep an account. See where they are spending, whether they are saving or no; give them tips on how they can save. Reward them when they do save, show them how this grows, introduce them to the concept of interest. They can then invest on a regular basis and watch it grow. Once they see it grow, you will see how self motivated they are to save and to increase that investment.

4. Earning: They can start earning, yes you got that right. Help them start a lemonade stall or any small business which they can run with your help- you will be surprised at the number of ideas they can come up with to start their own business. Start them young!

5. Gifting and Charity: We have only spoken about money when it comes to earning, spending, saving which all impact them. However, the other side of this coin is to gift and donate. They should also know how giving a gift feels good or how donating/ helping someone in need feels. This last thing keeps them in check, helps them understand how money can be used for a bigger purpose and how it can make them feel really happy.

More importantly, talk about money with them when there is an opportunity to do so. This diwali, when they get gifts and cash have the money talk with them. Happy Diwali!

First Published on Oct 27, 2014 05:15 pm
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