Children's Day: How Indian parents are using bank accounts, e-commerce apps and board games to teach money skills to kids

Tips on teaching about budgeting and spending 

Introduce your kids to a financially responsible way of life by providing a regular allowance and guiding them to create a simple budget for spending. "Encourage them to allocate their money into three categories: spend (everyday expenses), save (for future goals), and give (for charitable donations or gifts)," advises Gaurav Goel, a SEBI-registered investment advisor.

For instance, Radhika Shah encourages her daughter to set a budget for monthly expenses and save at least 10 percent of her monthly pocket money.

While shopping for games, stationery or groceries, Sheth has taught his son to compare prices before purchasing from a couple of e-commerce websites. For instance, he learnt price comparison by shortlisting items on e-commerce apps (e.g., Amazon), reviewing his choices, exploring alternatives with the same products (e.g., DMart, Flipkart), and comparing total costs to secure the best option.

“Through interactive learning, he discovered the value of comparing prices across e-commerce platforms. This involved shortlisting items, reviewing selections, exploring alternatives, and comparing costs to make informed purchasing decisions,” says Sheth.

"To track expenses and understand money management, children should be introduced to budgeting apps or spreadsheets," advises Goel. These tools enable them to visualise their spending habits and review expenditures at month-end, fostering financial awareness and responsible decision-making.

Introducing banking products 

Mumbai resident Chitrang Shah, 38, has taught his 14-year-old son, Vihaan about banking products from the age of 10. “I am aware of fixed deposits, recurring deposits (RDs) and interest rates,” says Vihaan. By investing in RDs for annual school and coaching fees, Shah has been teaching his child the value of saving and compound interest. “Vihaan knows how interest rates are calculated on these debt investment products and the returns investors get at the end of the tenure from these investments,” he says.

Chitrang Shah has also trained his son on using UPI for secure payments, with all transactions conducted under parental guidance. “Vihaan also understands the distinction between debit and credit cards, understanding the risks associated with credit card overspending and delayed payments,” he says.

“Teaching kids about credit cards' interest fees and consequences of missed bill payments can make them budget-savvy," says Shah of BrightCHAMPS. It's also crucial to emphasise PIN security while using the cards and warn them about phone scams targeting CVV, PIN, and OTPs, she adds.

“Let children use a credit or debit card for small, supervised purchases and go over the statement with them. This will teach them to keep track of their spending,” says Goel.

Similarly, Juhi gained hands-on experience in banking basics at a workshop, learning to use chequebooks and debit cards and withdraw cash from ATMs. “She was also taught about minimum balance rules for a savings account and potential fees for insufficient balance,” her mother Radhika says.

Managing debt 

To teach his son about loans and the risks associated with them, Chitrang Shah uses a real-world approach. He provides a loan for desired items which he can’t afford from his monthly allowance, coupled with a repayment schedule and small interest rate, illustrating the consequences of borrowing and the value of prompt payments.

“I have explained concepts such as good and bad debt to my son,” Sheth says. For instance, a student loan can be ‘good debt’ if it helps with future earning potential, while high-interest credit card debt is generally ‘bad debt’.

Also read | Children's Day Special: How to impart money lessons at a young age

Learning through games and workshops 

Engaging children in interactive tools like board games (Monopoly, The Allowance Game, The Game of Life) and participating in workshops and activities (financial literacy camps) are other ways that parents adopt to teach them money management skills as well as personal finance and economic principles. According to Shah of BrightCHAMPS, these hands-on approaches foster financial awareness, responsible spending, saving, and budgeting habits, while also developing critical thinking and decision-making skills.

For instance, Radhika Shah plays board games like Monopoly and Stock Market, which simulate real-world financial scenarios, where players buy houses and stocks, and manage savings. “Through these interactive games, my daughter has picked up essential terms and principles of personal finance, such as budgeting, saving, and investing,” she says.

Creating awareness around financial frauds 

Kids often spend a lot of time online, where fraudsters can easily trick them into sharing personal details or money.

“It's crucial for parents to talk to their kids about financial frauds these days as cybersecurity has become one of the major concerns for the new generation – from fake online deals to phishing messages - it is all over the internet,” says Krishan Mishra, CEO, FPSB India, the Indian subsidiary of the US-based Financial Planning Standards Board Ltd.

Sheth says he guides his son by having open discussions during family time, sharing real-life examples of fraud, and guiding him on how to verify trusted sites and accounts.

Similarly, Juhi is now aware of credit card related frauds such as phishing and skimming due to the conversations at home, says her mother Radhika. “Open conversations on a variety of these subjects often help bridge an important gap between parents and children, and encourage a healthy exchange of information,” says Mishra.