Ability to manage money is a basic skill on which a lifetime of financial well-being rests. And yet, this is one thing few children are taught Value research online did a hangout session on Essential money management skills for your children. The YouTube Video for the Hangout Session is given below along with the some written excerpts.
ValueResearchOnline on Essential money management skills For Children
On 15 Jun 2018, ValueResearchOnline had a Hangout Session where he talked about Essential Money Management Skill for Children. The video is given below. It is 30 mins long but the portion related to kids is till 14 mins. The Transcript of the Video for the part related to Kids is given below. Some important points are given below:
- We create secrecy about Money. Money should NOT be a taboo subject.
- Educating our children about money will prepare them to take better financial decisions when they grow up. This is one of the best things we can do for them.
- Money gives freedom. Having more than enough gives us a choice.
- Kids should learn to Live within the means. They should learn about Value for Money.
- One should understand The Flow of Money. You earn, you save. If you don’t earn, you would eat into savings
- One should understand the Phases of life. Till 20 we are dependent on parents, for next 40 years we work and then for next 40 years we use the money saved during our working life
- Credit Card is not a lottery. It is meant for convenience, not Credit.
- Credit Card debt is reverse of compounding. You can never enough to get out of debt trap.
- You can do without a lot of skills but not without money skill.
Kids need to understand Role of Money and Happiness. When kids are young and don’t understand the worth of they don’t need an expensive toy to give joy.
We create secrecy about Money. We shield our kids. You can do without a lot of skills but not without money skill.
Begin with, start with telling children that if Spend money on things which don’t need you will not have money for things you need.
Q: At what age do we get kids involved in money
The moment they start understanding.
They have to learn to work within a budget. Prioritizing things. Cellphone ranges from 5,000 to 50,000. Is he getting the value of money? The child should not get this idea that he is taken care of if he is given the most expensive item.
Learn the Value For Money. You can be impulsive of small things when you go out on vacation,
For a 4 -5 years old, given then 100 Rs and ask them to keep accounts, trust with money. What is important, what is not.
Q: When do you explain to kids the flow of money?
The flow of money is obvious. You earn, you save. If you don’t earn, you would eat into savings
He needs to understand How to make money grow, spend wisely, invest
Savings are important as one does not work in all phases of life. Use the money saved during working age. Err on side of caution
Our life assuming one lives till 40 years is as follows,
- For 20 years we are dependent on parents
- 40 years we work
- 40 years he should outlive his savings
Money gives you freedom. Having more than enough gives a choice. You can try out things, focus on things you like.
How to train kids about money? (8:48)
For small kids incentive to save work. Do Home banking. Set a target, set a budget, set a goal. Kids at this age need Incentives. And if you give 100 Rs and they save Rs 20, reward them. This will teach them the concept of compounding how money doubled.
At appropriate age Open a bank account,
Parents have to caution them against perils of borrowing.
Have a little more than enough.
The credit card is not meant for credit, it is meant for convenience. Credit most expensive credit. You can never earn enough money to pay the debt.
Valueresearchonline is a website which provides information on Mutual Funds and other Investment avenues stocks, through their website, monthly magazines (Mutual Fund Insight & Wealth Insight for stocks) and books. ValueReseach Online is the first starting point if you want to know about Mutual Funds in India.
ValueResearchOnline website was founded in 1994 by Dhirendra Kumar. His TV shows, articles in Hindi and English newspapers are widely read and appreciated. Dhirendra conducts Hangout sessions every Friday from 12:30 pm to 1:30 pm which is broadcasted live on Youtube and Facebook, to help you learn and understand savings and investment issues. He also answers investment-related questions. Participation is free of cost.