Don’t you think that your children should be literate enough to understand money management, basic finance concepts and routine banking practices?
You must be aware that money doesn’t grow on tree. However it is equally important for your children to understand the value of money and importance of financial education. Children should be made to realise that preserving the money is tougher than earning money. Familiarity with basic finance concepts can make a big difference when the children grow up.
You might wonder how to go about in motivating the children to learn basic finance. Well, the best way is the practical education as it is generally believed that finance is a boring and dull subject. Carry on reading further to get more idea about how to impart basic finance knowledge to your children.
Basic Finance Concepts
Tips for Money Management Education for Your Children:
- Teach your children about the various coins and notes and basic finance concepts like simple budgeting, expense accounts and interest.
- Start as early as possible may be from the age of around 11-12 or little earlier if the children are very good at math.
- Send them for little shopping such as vegetables, grocery, etc. Start with Rs.50 notes. Ask them to make a small list before going out for shopping. Insist on expense account when the children come back after shopping. Check the account and verify the balance amount.
- Even if there are mistakes let them learn from mistakes instead of discouraging or scolding them. They will become perfect after few visits.
- Next step would be to ask them to handle Rs.100 and Rs.500 notes.
- Ask them to save some amount every month from their pocket expenses. Let them deposit this amount in their bank account. This is in fact a modern version of old piggy accounts maintained at homes.
- You can show them the bank passbook where a small amount of interest has been added to the amount saved by them. This is their first lesson about investment.
- Let them buy something from the invested amount every year. You may add some bonus to this amount so that they can buy a bicycle, video game etc.
- Don’t try to teach them about investment in stock and property until they are of at least 20/21 years of age and never before they start earning handsome income.
Tips for Basic Banking Education for Your Children:
- Start as early as possible may be from the age of around 16-17 when they have just completed the matriculation.
- Open a savings account in their name and off course jointly with your name. Most of the banks willingly open a savings account for minors. Many banks offer a facility of cheque books and independent operations by the minor. Choose a right savings account as some of the accounts are valid only as minor under guardian.
- Ask them to go to bank for cash/cheque deposit so that they learn how to fill up deposit slips without any mistakes.
- Before allowing your children to withdraw cash, explain them about the difference between a bearer cheque and an account payee cheque .
- Let them get sufficient practice of writing bearer and account payee cheques.
- Even if the children make any mistakes let them continue so that they can learn from the mistakes.
- Monitor the account and provide guidance as and when necessary.
- Give them an idea about modern day banking that involves use of ATM/Debit Card and internet banking system.
- Monitor their use of ATM/Debit Card and internet banking. Never give them an access without your presence.
Tips to Make the Financial Education More Interesting With the Help of Financial Games:
It makes good sense to try out board games, PC games or online games on basic finance concepts for your children. However I would like to caution you that some of the games may have an element of gambling and hence you should be careful while selecting the game. You may have to be little stricter especially with internet savvy children.
- There are number of reasonably priced innovative games available in the market. Monopoly, financial football, the game of life and practical money skills for life – these are few popular games that are available as online or offline versions.
- Financial games are an excellent means of inter-active education about basic finance. Such games are quite good to learn basic finance concepts including long term planning, ups and downs of life and financial goals at various stages of life.
- Financial games can make youngsters realize the importance of planning, perfectionism, optimism and above all the importance of financial education.
This article is written by Lambodar for SS Home Tips – the Family and Home tips and guides.