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When should your children be financially educated?

Children are like wet clay. The way you mould them is the way they will grow up to be. That is why children mirror their parents and upbringing. When it comes to finances, starting early is always advisable. Getting financial education early in life is important. This will help your children avoid the same financial mistakes that you made.

You should instil in your child the value of money from an early age. Children who have some financial knowledge become independent early on. So, here is how you should educate your children at every phase of their life.

Age-wise financial education

  • Between 0‑5 years

This is the age of growing up, of learning how to walk and talk. At this stage, the need for financial education is the least. You cannot discuss finances with a thumb-sucking toddler. But you can start with the basics of valuing money. Teach children the value of food. Make them understand that unreasonable demands are not acceptable. Teach them to take care of their own belongings. This helps children understand that everything comes at a price. They will not take losses and wastage for granted

  • Between 5‑8 years

Now your child is in a better position to understand things around him/her. This is also a little early to teach them about finances. But, you should become strict when it comes to wastage and unreasonable demands. Teach your child not to waste food. Explain to your child not to compare his/her friends’ lifestyles with their own. Teach your child about how every rupee is earned only after hard work.

  • Between 8‑12 years

This is the time to introduce the concept of pocket money and living within one’s means. You can get a bank account, and teach your child about banking and debit cards. Teach your children to spend within the budget and not splurge. This will enable them to use their pocket money in a wise way.

  • Between 12‑18 years

This is the age at which children become difficult and rebellious. But if you have been teaching them about finances from their childhood, you will be better placed. It will be easier to impart the much-needed financial education at this stage. You should open a junior bank account in your child’s name. Credit their pocket money to the bank directly. Equip the child with a debit card and ask them to meet their personal expenses themselves. You can also teach them about insurance, MFs, the share market, and other avenues once they turn 17 or 18.

  • Between 18‑22 years

This is the time when your children pursue higher education or vocational courses. If you are availing an education loan, make your child the joint applicant. This will put the onus of repaying the loan on them and make them responsible. Since they are well-versed with finance by this age, you can ask them to learn the art of investment. If they are not earning, include your child in your financial portfolio and teach them the ropes.

  • Between 22‑24 years

At this age, your children become independent. They are mature enough to take their own financial decisions. But, you should hand-hold them and guide them at the start of their financial journey. You can teach them the basics of taxation, importance of insurance, risk v/s return analysis, and so on. This will help your child get the required financial knowledge.

Like you teach your child how to ride a bicycle, teach them how to handle their finances as well. Financial education is very important for achieving financial independence. If you instil this education from a young age, your child would be better poised to take on the world. So, start your lessons today.