When to teach finance to your kids ?
When should you teach finance and its concepts to your child ? I would say the earlier the better, don’t wait for him or her to learn from school. One of my friend does not “expose” his smart teenage kid to concepts of investing as he thinks his mind will get ‘corrupt’. You need money to teach your kids and
for their expenses. Delaying your family to attain the knowledge of finance and investing is like delaying opportunities. Why I say the age of nine, it is because this is the age when the child starts talking to himself about what he absorbed from people and friends around him. This is the age when he starts thinking of ‘whys’ and ‘whats’ and ‘hows’. And when he grows to teens then he becomes vocal to put forward the questions and argue on the basis of what he has absorbed and thought till the age of 12. Depending upon the intelligence levels, grasping power and the environment the child grows a child may be able to learn faster or slower. Please do not wait and start with basics and examples of day to day life. If you learn’t something at the age of 25 or 30 or are still learning it does not mean your child needs to wait that long. The evolution is no longer creating better animals than humans in shapes. It is now the evolution from smarter to more smarter people with sharp reasoning and intellectual skills. Do not suppress growing genius at your home !
Basics of Finance for your growing child:
Have your child appreciate the importance of Saving and set weekly, monthly, quarterly and yearly goals. You need to encourage your child by giving benefits or gifts for saving. e.g. you can give an offer to your child whatever he saves in a month you will give the same amount to him as a bonus. Rather than throwing money as pocket money, inculcate the habit of learning to save.
Study a topic and use internet:
Give your child “Topic of the week” or “Topic of the month” and ask him to research on internet and give support in helping. Ask him to simulate or explain a real life situation from his learning.
Do not blame your child for lack of interest:
The last thing is to force learning on your child. Don’t scare him with information overload. If he is not interested I would say you are not a good teacher or mentor. Create genuine interest by making a game or enthusiasm out of it and not another subject of school textbook.
Move ahead Step by step :
Start with baby steps and move ahead as he learns and picks up and shows interest. Maybe your child shows more interest in simple profit or compound interest and banking, or he may show interest in stocks or may be interested in global market and currency. Obviously these are next steps – he or she may be feel delighted with savings from the piggy bank to start with and you giving an equal amount of bonus as he saves.
Cash and credit :
Tell them about hard cash and credit cards and debit cards. Credit cards are often misunderstood by youngsters and need to be understood well. To rent your house or buy your house and concept of taking loan(mortgage) will encourage them to earn when they grow up. This will in turn help in their career.
Do not hide the high risk strategies:
If you think crypto currency is a gamble it does not mean you ask him not to read about it. If he gets from somewhere outside and starts investing without your knowledge you will repent. Tell him the facts you know, ask him to collect the pros and cons and make a good judgement after discussion. Let him know the high risk and high gain concept. Let him know that you cannot put all the eggs in same basket. Information is everywhere and people throw information for their gains(even the social workers).
Tax and Insurance Systems :
From buying chocolate to Insurance of your car, you can easily teach with real life examples. Ask them to look at the receipt when they buy a meal at McDonald to check the tax paid and ask them where it goes. Explain the concepts to them or ask to search on Google. Tell them about fire hazards and accidents and how insurance helps. Do not be lazy by saying ‘they will learn when they grow up’. Prepare them to learn in a smarter way.
Educate your child as she may be your best financial partner and may give you best advises. Trust the young genius, your brain may not be able to absorb due to saturation of information. A fresh idea from a fresh mind should never be ignored. Good luck !
Author: Gagandeep Singh