Today is children’s day in India. So let us start this day to teach our kids about money matters. This is very much important to sow the seeds at the early age. This will bring the natural habit in their life. So let us discuss about this in today’s post.

Money and Kids

These days kids normally believe that money grows in their father’s ATM. Because whenever parents need money, then they withdraw it from ATM 🙂 It is not their fault. It is the fault of parents, who not teach how ATM will give them money whenever they ask for! So being silent on money matters with your kids will actually may change their thinking and mentality about money.

A recent survey by ING ZING states that 80% of respondents replied that kids follow parent’s money habits. Around 84% of respondents were habit of buying things online and felt that their kids too may buy the things online in tempt which may not actually be useful for them. At the same time, 80% of participants accepted that, their kids are smarter for them when it comes to money. The majority of participants have heavy investments in Bank FDs and Insurance as their major investments. More than half of respondents allocate less than 10% of their savings towards their kid’s future 🙂

How you felt after reading the above findings of the survey? Of course, these opinions may not be of majority Indians. Still, it gives us some glimpse on how and what way parents think about money. Below are the points, which I felt very much important to make your kid know more about money.

1) Start early!!!

Starting early for investment will give you more advantage to invest with a small amount. It applies to teaching your kids about money. Let them first understand the currencies they are holding. By doing this they will feel the importance of money and denominations and how much it values to them.

Yesterday I found it hard to teach my kid about how many 10 Paisa coins equals to Rs.1 🙂 Today’s generation never ever touched the currencies, which are in denominations of paisa. Finally, I made her to feel by searching the images of 10, 20, 25, 50-paisa denomination images in Google. So if you start educating them about denominations and currencies from the basics, then they understand how many Rs.10 will be in Rs.500 or in Rs.1, 000. Otherwise, they never feel the difference between Rs.10 note and Rs.1, 000 notes.

2) Make them aware about the difference between NEED and WANT

Next priority for you is to make them what is necessary and what is not. First, start practicing yourself before preaching your kid. Otherwise, your kid may cross question you about your useless shopping!!! Once they learn more about money, then there is possibility that they may tempt to go for shopping or buy online using your cards. Therefore, it is very much important for you to let them first understand the NEED.

3) Push them for research before buying anything

If they ask something, which is a very much necessity for them, then do not buy it directly. Let them do research like which brand is good, which is best suitable to them or where they get it at cheaper. By doing so, indirectly you are pushing them into bargaining habit and searching for best. In the beginning, they may resist you. Reason is, earlier you never pushed them for such activity. However, if you insist more and more on this then it will turn to be habit for them.

4) Give pocket money, but MONITOR

It is a good idea to give them monthly pocket money. By doing so, you are testing their money habits. They feel free to use that much money according to their wish. It feels good to anyone to have their own money, which purely meant for their spending. However, do not forget to monitor it. A strict monitoring is very much important. By doing this activity, you are providing a teaching tool to your kid

5) Teach them the difference between SAVING and INVESTING

Once they know, the above four steps, then if they save some money from the pocket money, then let them educate about the importance of investing. Mere saving will not help to grow money. So let them understand the basic products of earning from their investments. It may be a few hundred rupees. But make aware them how a small amount may grow into a big lump sum if they start early. For smaller kids let them not introduce any product. Rather, you give them offer like, if he/shre give the saved Rs.100 now then you return your kid Rs.110 after a year. By doing this activity, you are creating curiosity in your kid about the benefit of investing.

Once they are very much aware about the idea of investing, and then slowly try to expose them towards simple products like savings account, Bank FDs, PPF or to Mutual Funds. However, do remember that these products at a later stage of life.

Finally, as I pointed above, first be practitioner yourself then preach. Therefore, before bringing your kids to money matters make sure that you are practicing yourself. Otherwise, it is of no use 🙂

Image courtesy of [junpinzon] at

13 Responses

  1. Hello Basu,
    I have keen interest in finance and have been following your blogs and also blogs by Subra, Pattu. I am not sure, if this post is the right place to start, but, I would like to know how to become a CFP ? What is the criteria and where do we start learning and clear the certification ?

    Can you please guide me on this ?

    Karthik G

    1. Karthik-I am very much happy that you want to pursue CFP. Regarding full details about CFP, I suggest you to vist FPSB India website or call them directly to know more. There are so many institutes which conduct training classes. But I personally not in favor of them. Because they not care about whether you cleared or not. Instead I did under one lady who is in Bangalore and very much caring. She conducts classes through SKYPE too. If you are interested then I can provide you her details.

      1. Basu,

        Thanks for your quick reply. Yes, I am interested. I would first like to understand the complexity involved and wanted to know if it can be done as Part-Time Certification.

          1. Sorry for the late reply and Thanks for the details. I will have a discussion with Madam and get back to you, for any queries / Guidance.

      1. please write about the SBI life POLICY smart guranteed plan newly launched


  2. Hello Basu,
    Thanks for this wonderful article on children’s day, these day we parents are busy spending a lot of money without planning or with our kids in shopping malls/online. I feel this habit enforce our kids behavior in their life ?
    I would request parents here please plan and discusses with your children’s about your next buying’s ?
    Thank you Basu again, I’m daily visitor to your blog.
    Keep the good work.
    Kirthan Thongalmudde

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