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Sowing the seeds of financial literacy at an early age prepares children to manage their finances and make confident decisions as adults. But given their tender age and limited understanding, how can you introduce them to concepts like saving, investment and financial disciple?
To mark the celebration of Children’s Day and emphasize the importance of financial literacy for children, Cafemutual reached out to parent MFDs to understand the approach they follow.
Here is what they shared.
Ritesh Sheth of Tejas Consultancy
I gifted my son a piggy bank when he was in standard fourth and gave him coins to put in it. Over time, he became habituated to it and voluntarily followed this practice. When he saw his piggy bank fill, I introduced him to the concept of saving.
Next, I made use of books and pictorial illustrations.
I read with him Brette Sember‘s ‘Everything Kids' Money’ and drew illustrations on savings and investments. For instance, I once made an illustration of how children could buy their dream school bag by saving money.
As my son grew, I introduced him to more financial literature. He is in his final year of college now and has read articles and books written by Warren Buffet and Morgan Housel.
What does this teach us?
- Piggy bank is an effective way of teaching savings and inculcating financial discipline
- Pictorial illustrations attract children’s attention and simplify financial concepts
- Introducing the right books at the right time prepares them for the next level of complexities
Sachin Karate of Varad Financial Services
A few years back, I opened a bank account for my 10-year-old son and have started taking him along there. Last time, I taught him to deposit money. I guided him to fill out the deposit slip by explaining what the contents meant and reading out loud the details to be filled in. While it took a few such slips and 20 minutes to get the details correctly filled in, it was a fruitful exercise. Similarly, I also take him to ATMs.
Further, I keep sharing with him what I professionally do and also take him along to office at times. He has thus become accustomed to words like SIP, mutual funds, returns, etc. And, as a routine, I make him sit beside me while watching news. Listening to certain words raises questions in his mind, which lays the base for our financial conversations.
While my son is still a kid to make sense of all of this now, the whole idea is to familiarise him with financial terms so that he finds it easier to connect with them as he grows.
Additionally, I play fun financial quizzes with him. For instance, I may ask him Nifty has how many shares and give him two options. He randomly picks an answer and learns a new thing.
What does this teach us?
- Encouraging children to ask questions develops their thinking skills and prepares them to make logical financial decisions as adults
- Watching news is a good way of introducing children to newer financial terms
- Playing games is a fun way to expose children to financial concepts
Vinod Jain of Jain Investment
I introduced stocks to my daughters at an early age. I asked them to pick their favourite everyday brands like Colgate, Maggie (Nestle), etc. and invest in those. Since these were their favourite brands, it kept their interest alive. Further, I encouraged them to start a SIP from their pocket money. While I initially guided them, I always asked them to execute these transactions by themselves.
Eventually, I simplified the concept of long-term investing and return generation by explaining to them their account statements.
I also recommended my daughters to watch ‘One Idiot’ a short film on YouTube to understand the importance of financial independence.
What does this teach us?
- Correlating investments with something that children like (for example, commonly used products) keeps their interest alive
- Encouraging them to execute transactions by themselves gives them practical knowledge
- Videos are a good way to teach children financial lessons
