The other day I overheard a mom’s heated conversation with her son. She sounded annoyed and was telling her child about why he just can’t miss karate class because they had paid tons of money to enrol him and being absent was simply not an option. They had to get their money’s worth! The boy, absolutely clueless could sense the anger in his mom’s tone and followed her quietly. That’s when it struck me. Do our children understand anything when we say money, budget, savings? How much of financial knowledge do we pass on to our kids? We expect them to learn 2/3 languages, they are all born tech wizards, but when it comes to finance and matters of the money, we silently ignore, convincing ourselves that ‘they are too young for it’. I decided it was time my child learnt a few words related to money and finance. After all it was going to help her in the long run.
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1.Income:
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Probably the most fundamental term that kids must know. Salary, rent are part of the income that come in to the house. Teach your kids the source- tell them where as parents you go to work and how you get the money home. Driving home the value of money is the precursor for financial knowledge.
2.Savings:
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One of the most important terms to teach your kids so that they realize the value of money as they grow up. Teach them why it is essential to save a portion of mom and dad’s earnings and how it would come to use and help later when they grow up. To make your point clear, use a children’s piggy bank and demonstrate by saving in money they receive as gifts.
3. Investment:
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This is something maybe slightly older ones will understand. While saving is an easier concept for the 3-4 year olds, why the saved money shouldn’t sit idle is something the older kids need to be taught. Even if you don’t go into details make sure they know some of the popular investment terms so that they will get used to them and teaching them later on is easier.
4. Credit/Debit:
This is easier when you sit down and explain in simpler terms like ‘money coming in‘ or ‘money going out‘. Explain with the help of daily use items like the debit/credit card and tell them how the money is used. Use their piggy bank savings to show how money taken off/added to it is known as credit/debit.
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5. Budget:
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This is one term that kids will have to start getting used to quite early in their life. Explain to them how not just nations or bigger organisations have a budget planned, but even their day-to-day events and expenses need to be well within the budget. Draw a realistic budget to your child before taking them  shopping and tell them they can buy anything useful ‘within’ the budget but crossing it is a strict ‘no’.
6. Expense Keeping:
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I remember as a kid, my mom used to sit in a room with her diary and a pen and the much guarded ‘money box’. She used to tell me in plain terms that she wrote our family’s every expense. Only later did I understand the importance of it- and feel I should involve my child in a similar manner. Simple practices that will set a precedence for our kids in future.
7. Deposits:
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Once the kids are aware of what investment is and why it is essential to safeguard the money, teach them the basics of deposits- fixed and recurring. Teach them how money saved over a period of time, ‘grows‘ and comes back to us ‘bigger‘. The calculations involving deposits and interest rates will be a nice game to play with the slightly older kids to teach them mathematical problems.
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8. Interest:
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Children will eventually learn the formulae for simple and compound interest in their math classes and we could make it easier at home by teaching them why money we borrow grows with time rather than make them memorize SI = PNR/100!
9. Loan:
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The actual concept of loans and the procedure would be understood by older children, but a little role play with the younger ones is easy to drive home the concept. When you see them playing with their kitchen set or their park set- borrow something from the little minds and tell them that you will soon repay the ‘loan’ (in short, return it).
10. Tax:
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When teaching kids about their parents’ savings and their earnings – taxes form an integral role. Teach them how the government functions and how each one of us contribute to making the country a better place to live in. Create some role play and introduce a ‘tax-collector‘ character and how the others pay taxes to them.
The key is to get them involved. Keep talking to them about the basics to mould them as responsible citizens of tomorrow.
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Neha Savla
KSP Promotions
Srinath Setty
Rushita Sheth
Mareena Francis
