How to educate your children about money
Every parent has a dream to provide the best education to their children. They want them to progress in every field, whether it is related to studies, sports, music or any other activity. Many parents lack the promising vision for their child's career. They want a kid to learn everything, at the same time they forget to ask, why? Study is required for mental education; sports for physical education, but what about its financial relevance? It's true that the intrinsic value of study and sports cannot be calculated in monetary terms but what about having a vision to act for some income along with other activities.
History of Indian education system
Our ancient education had many things to teach children about money from the elementary education itself. The children were supposed to complete their education in the ashram. For complete education term, they had to work hard and in return, they were provided with education. During the final pass-out, students had to pay guru-dakshina (fees) to their masters (guru) from their own earnings. This process was very encouraging for children to make them financially independent.
Ways to inculcate finance education in children
Let's see how we can support our children to learn finance and money from their own efforts:
- Teach children about money from the day they learn numbers and counting. Educate them about its importance through stories and games
- As children grow, they tend to demand more. Gradually teach them about the value of money. Tell them stories of your struggle and what difficulty you faced when you started earning. Teach them about importance of saving and spending wisely
- A lot of demands by the children are not genuine. Teach them to understand the importance of their demand. Let them decide about the importance of a demand being need or want
- For their every requirement, provide a fix amount of money and try to give them a choice, so that they can select the one that suits them best, while saving some money. For example, if they want to buy shoes give them Rs 500 for purchasing the shoes and tell them that whatever they will be able to save, it would be given back to them for their saving
- As children grow, start giving them allowances for their monthly expenses. Keep strict watch on how they spend money. Tell them to make details of expenses every month. If your child controls her/his expenses well, then give her/him reward points. Aggregate these annual points and give them some handsome gift. Whatever a child saves in a year, try to praise her/him and motivate to save more
- Sometimes borrow money from children for their motivation and repay with some interest on the amount. This way, they will learn about interest and investment. They will be encouraged to save more
- Don't ignore if your child asks some questions. Answer them for all their queries until they are satisfied. Groom them to be more analytical as they grow
- It is very important to allow children to experience the loss and profit by themselves. The loss will increase their risk assessment ability, and profit will motivate for better performance. Incase child feels demoralised then boost them with your valuable guidance for boosting their moral
- While selecting the career, advise your child to keep a view on earning capacity along with interest in the opted field
Some people think that money can make children money-minded, selfish, and even they can slip into wrong hands, but I say, this is what a good parent can take care of. If you take proper care, then there's no doubt that as your child grows you will find her/him perform better in career. They will learn to set their goals accurately and focus better towards their dreams in life.
Amit Sethi is an MBA (Fin) graduate. He has spent 8 years in Equity research and stock-broking sector. He can be reached email@example.com
Photographs: Rediff Archives