For children, financial literacy begins at home, and the first step is inadvertently taken by parents when doling out pocket money, which gives them financial independence. It also offers parents the chance to educate them about the value of money.
A few tips keeping in mind that kids are more aware today than what many of us were at their age:-
1. Start their allowance at around 7 years or when you are comfortable that the child can handle money.
2. Start with small, weekly payouts and increase these progressively to a monthly amount.
3. Revise the amount with age as the child’s needs and preferences change.
4. Fix the amount after asking other parents, to avoid peer pressure for the child, but keep your own budget in mind before doing so, and explain it to him.
5. With growing emphasis on digital money, opening a bank account (offline and online) is better than giving a piggy bank.
6. As financial independence can trigger a spending spree, encourage the child to save in his bank first before spending, by guiding him into depositing the money received on festivals or as gifts from relatives in the account.
7. Allow him to set his own short-term spending goals, like buying a favourite toy, books, etc. in order to incentivize his savings habit.
8. You can pitch in at the end if the cost is high, but only if the child has been sincere about saving for a goal.
9. Monitoring of spending should be done by you, but the decision to spend should be done by the child so that his financial freedom is not hampered, after you have set a framework and ground rules.
10. Let him make mistakes while doing so, and guide him when he needs your help, but don’t bail him out financially and let him rework on his expense goal.
11. Since borrowing or lending is common among teenagers, advise your child against the pitfalls of debt or excessive lending and monitor such dealings.
12. Never pay for errands carried out by him for household chores, so that he is fully aware of the difference between duties or obligations and money-making opportunities, between earning and rewards.
13. Don’t deduct any amount from his allowance as a punishment, but find other means to discipline him.
14. Discourage the child from becoming greedy, or always expecting to be compensated for every improvement.
15. Split the financial learning of your kid in 4 stages or age bands: 5-8, 9-12, 13-15 and 16-18 years.
A few tips keeping in mind that kids are more aware today than what many of us were at their age:-
1. Start their allowance at around 7 years or when you are comfortable that the child can handle money.
2. Start with small, weekly payouts and increase these progressively to a monthly amount.
3. Revise the amount with age as the child’s needs and preferences change.
4. Fix the amount after asking other parents, to avoid peer pressure for the child, but keep your own budget in mind before doing so, and explain it to him.
5. With growing emphasis on digital money, opening a bank account (offline and online) is better than giving a piggy bank.
6. As financial independence can trigger a spending spree, encourage the child to save in his bank first before spending, by guiding him into depositing the money received on festivals or as gifts from relatives in the account.
7. Allow him to set his own short-term spending goals, like buying a favourite toy, books, etc. in order to incentivize his savings habit.
8. You can pitch in at the end if the cost is high, but only if the child has been sincere about saving for a goal.
9. Monitoring of spending should be done by you, but the decision to spend should be done by the child so that his financial freedom is not hampered, after you have set a framework and ground rules.
10. Let him make mistakes while doing so, and guide him when he needs your help, but don’t bail him out financially and let him rework on his expense goal.
11. Since borrowing or lending is common among teenagers, advise your child against the pitfalls of debt or excessive lending and monitor such dealings.
12. Never pay for errands carried out by him for household chores, so that he is fully aware of the difference between duties or obligations and money-making opportunities, between earning and rewards.
13. Don’t deduct any amount from his allowance as a punishment, but find other means to discipline him.
14. Discourage the child from becoming greedy, or always expecting to be compensated for every improvement.
15. Split the financial learning of your kid in 4 stages or age bands: 5-8, 9-12, 13-15 and 16-18 years.