Instilling healthy money attitude in children is important: Shankar Nath, Junio

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Teaching your child about money and financial discipline at the right time could empower them to better navigate through life and have a secure financial future. However, most parents are unsure how and when to start imparting the basics of handling money to their children. In an interview with Money9.com, Shankar Nath, Co-Founder, Junio, a recently launched platform which provides smart cards for children’s pocket money, speaks on the various aspects of teaching money management to the child. Edited excerpts:

Should money management and basic personal finance be some of the early skills to impart to one’s children?

Just like we teach our kids good etiquette, healthy eating habits, how to stay physically fit, imparting basic financial lessons is equally important. As parents, we agree that it’s our responsibility to invest in our kid’s future. Similarly, it’s also our job to teach them how to use their money wisely and also save it for their future so that they grow up to become financially independent. Therefore, having the knowledge of money management and personal finances is a basic life skill that has a direct impact on their well-being. Teaching important monetary skills such as budgeting, saving, etc. at an early age will help your children to apply them in real life.

At what age do you think parents should ideally start imparting the first money lessons to their child?

There isn’t a particular age to start with the first money lessons. Indeed, a four-or five-year-old kid may not understand the valuation of money. He/she cannot really differentiate between Rs. 10 and Rs. 100 at this age. So, you can’t teach them in-depth money lessons right in the beginning when they are still very young. However, the best way to start is by developing the quest to achieve financial independence at an early age. Financial education or financial literacy is a process and the knowledge develops gradually. So, take one step at a time. With time, your child will start grasping certain basic financial principles.

What are the ways to get kids acquainted with the basics of handling money and saving?

Often kids form their attitudes about money after understanding what they observe. They pick up on how you plan your expenses, if you put money into savings, or spend irresponsibly. And so, instilling a healthy money attitude is important. To begin with, start talking with your kids about simple money topics such as saving, budgeting, spending, and donating. For instance, take advantage of teachable moments to explain basic concepts of handling money or saving. You can get them involved when you are creating a monthly budget. Like what amount of money and how you intend to spend it or how much you are saving in a particular month.

Now, in the age of instant gratification, inculcate in them the habit of saving. If your kid aspires to buy something, ask them to set a saving goal for the same and work towards it. You can give them a piggy bank and help them nurture the habit of putting coins into it. A daily ritual of putting coins into a piggy bank will subsequently help develop the habit of saving. Also, teach them the difference between wants and needs from a young age so that they develop smart spending habits. These will help them plan better when it comes to making big investments in the future.

At what stage should one move from piggy bank/pocket money to the real world of banks and other financial instruments?

While it is possible to open a savings bank account for minors above the age of 10, it is best to give them the independence to operate the same when they are 18-year-old. Slowly, you can teach them how savings accounts function or how to deposit money in an account.

What are the first investment lessons that one should impart to their child?

It is important to inform your kids about the importance of investing in the right things. You can create awareness that investing in one’s self is one of the best investments they can make. For instance, when your son/daughter starts earning, he/she will sometimes have the urge to go shopping, buy traveling, etc. But how can he/she invest money in learning a new course or skill? Gradually, as kids grow up, they can also learn about other financial instruments for life-long investment.

How has the digital world changed the concept of money management for children and what are the advantages and dangers of it?

Talking about financial health is as necessary as discussing the physical and emotional wellbeing of a child. When monetary transactions are increasingly done using online payment tools, children and teenagers are turning into online consumers in this digital world. We see their inclination to use digital payment modes such as using their parents’ debit or credit cards to purchase a game or ordering food. This trend is shaping children’s spending habits from a young age.