Children are the future. Brighter yet financially literate children will light up the future of our economy. Unfortunately, the financial education scenario is bleak in most parts of our world. Although money has a significant role to play in our lives, we fail to teach about money to our children, let alone talk to them about money. Most parents try to inculcate good habits and impart knowledge about every aspect of our lives during different stages of their kids’ life. But, again, they ignore imparting financial education to their children. As per a recent survey, only 16.7% of Indian teenagers are financially literate.

The Relevance of Financial Literacy for Kids

Financial literacy will teach kids to value money and inculcate money management skills that will help them in their adult life. It lets them understand their country’s and global economies, particularly during crises. When we open the door of financial literacy to children, they get inspired to create wealth and become financially independent sooner.

Financial literacy is just as crucial as other basics in life. Recently, the Reserve Bank of India (RBI) has proposed including the financial literacy program with school education. It shows the relevance of financial literacy for kids.

The Right Age for Financial Education

The earlier, the better. The latest research has shown that parents can impart financial education to their toddlers at three. At that age, kids will get introduced to numbers, and the basics of finance go well with it, making the learning process fun. We can also impart financial education to children of any age as per their level of comprehension.

How Can We Teach Children About Money?

The learning process depends on a child’s age, and a systematic approach should be followed in their financial education. For example, we can introduce the concept of currency to toddlers by taking them to the market and showing them how to buy things using cash. In this way, they can learn about how value changes hands in our society. Playing shopping games at home also helps.

Games like Monopoly are good for school-going kids as they introduce them to savings, investing, and wealth building. We can also give them pocket money and ask them to save in a piggy bank.

During their teenage, we can introduce them to banks so that they can save their pocket money in their savings account. Afterward, introduce them to financial instruments like Fixed Deposits (FDs), stocks, and bonds. We can also make them join the family budgeting process and let them talk about their financial aspirations. Then we can introduce everything related to money as per the development of their understanding of the concepts.

Happy Investing!

Neeru Seal

Alpha Research