Why don’t we educate our kids about finance early?

12 July, 2021 0 Comments

            Children and Finance

As a parent, we always want the best for our children. This doesn’t necessarily mean we want them to have the best clothes, toys or coolest games. It means we want them to be safe and secure. We want to pass on the good values on how to earn money. And you want to lay a foundation that they can build upon to do well in life.

The question, then, is whether you are teaching your children a foundation lesson that will impact their lives and future. Lessons on finance and managing money.

“Having a good working knowledge of money is an aspect we need to make time to understand to have a good life” says Mimi Partha Sarathy, MD of Sinhasi. “Today, money is central to transacting life, day-in and day-out. Where we live, what we eat, the clothes we wear, the car we drive, health care, education, child-rearing, gift giving, vacations, entertainment, insurance—you name it, money is involved.”

Kids are learning lessons about money one way or another. If you want to play a key role in shaping your children’s feelings, thinking and values about money, you need to give them the gift of financial literacy and how to manage money from an early age.

Start with the basics at a young age

The earlier you start a child’s financial education process, the better. Lessons should begin by age eight, because money habits and attitudes are already formed by then. Explain what money is, how it is earned and how it is used. Showing them how money works is more effective. So let them see you making purchases with money – be it cash or through credit cards or online.

Even if you pay with plastic, explain to your kids that you are using your money to make purchases. As they get older, they will start to understand. That is how we introduce money.

Instill a habit of saving

Kids’ early interactions with money will likely involve spending. They see you using it to purchase things, including things for them. So it’s important to teach them where this money comes from, the source – be it your monthly salary, your savings, etc. from a young age so that they understand that money does not come easily and it isn’t just for spending. Only then can we move on to the lessons on how they should be saving money regularly, too.

Learning to save isn’t just an essential money habit. Saving teaches discipline and delayed gratification. Saving teaches goal-setting and planning. Saving emphasizes on being prepared. Saving builds security and independence.

Savings for children

Start by giving them a piggy bank or savings jar where they can deposit coins or cash. With young kids, you will find it easier teaching them to save for a toy they really want, rather than for the future. Encourage kids to set short-term goals when they are small. It helps them learn the value of delayed gratification. As they have gotten older, they are now able to save for longer-term goals.

Parents can encourage their kids to save more by agreeing to match an amount for a goal that they are saving for. This makes it more real for kids. And most important is encouragement and love while going through the process so it becomes a habit for them, just like brushing their teeth when they wake up or having a bath every day.

Create opportunities to earn money

Kids need to have money of their own so they can learn how to make decisions about using it. Sometimes, an allowance can accomplish that. However, you could consider requiring your kids to do certain small chores around the house to earn their allowance.

There can be some chores the kids have to do without pay because they are expected to help out as part of a family. But if they want to get paid, they should have to complete certain tasks.

Help kids learn to make smart spending decisions

An allowance system makes them learn to live within a budget. They can then track how much they have coming in and going out and how much they are saving. Learning how to budget now will help them when they enter the real world.

An allowance system also helps that understand that money needs to be earned. And linking it to a chore or a task can help them understand that one needs to work for their money.

They have to learn that they will have to spend money on things they need when they’re adults and can make the choice to pay people to do things for them. So if the kids don’t do certain things they’re expected to do to help out around the house, and if they don’t get their allowance, this could help them understand what money really needs to be spent on.

These small lessons also help our children in making decisions – an important aspect of managing money.

Teach kids how their money can grow

Saving money is a great habit. But if you want your kids to learn how to truly build wealth, teach them about investing.

You can start teaching about how they could invest their money and see it grow at a faster rate maybe when they are around 15 years old. There are a lot of stock market games available on the internet and they can really get the hang of understanding which of their investments are paying off and in what time frame, Know More.

Child Wealth Management

Wealth Management for Children

“Some of my favorite childhood memories are of my mother teaching me about never to spend more than I can actually count from a young age. She would always tell me this famous Tamil proverb – ‘Never stretch your legs out beyond your bed’ – a great lesson in always being cautious when it comes to spending and especially taking loans.”

“And from my father, I learnt another great lesson - It is not how much money you make, but what you do with what you make, that makes all the difference.”

Managing Director,
Sinhasi Consultants Pvt. Ltd.


In conclusion, if you want your children to develop good spending and saving habits, with the values you believe in, they need to see you making smart spending and saving choices. In short, practice what you preach. And preach with consistency. Educating your children about personal finance is a process that can take time. But if you put in the effort and continuously communicate a clear message about money, you will instill the best habits, with strong values, that will serve your children well.

We urge you to have conversations with financial advisors who have seen and navigated these cyclical rises and falls. They are in the best objective position to help you understand and mitigate the risks of letting emotion get the better of you.

Reach out to us

We can help you understand how to maximise your investment goals or leave a comment below on your thoughts.


For More Details Contact :  Mr. Rajanish -  +91 9900130321 |  Mr. Saisri -  +91 9740013581 |  Email - contactus@sinhasi.com