Money Matters: Starting young for a bright future

Teaching financial literacy to kids is a very important aspect that every parent must follow. It helps them develop the skills necessary to achieve financial success later in life.The earlier we teach kids good money habits, the better they understand the value of money. Below are a few ideas on how to instill good money habits in kids. Today, in this article we help you what and how to teach your kids the importance of finance.

For kids aged 5 – 8 years:

Identifying and counting money: Introduce them to different currencies and help them identify, sort and count money.

Earning money: Reward work with money like getting good grades, doing chores etc.
Buying experience: Help them take money to the store, and hand over the money and buy something.
Saving money: Get them a clear jar instead of a piggy bank to keep their money. This way they can see their money grow which helps reinforce the benefit of saving.
Opportunity cost: Teach them to choose. E.g.: If they buy these shoes, they won’t be able to buy those skates. This helps restrict impulse buying.
For kids aged 9 – 12 years
Take them to a bank: Show them what a Bank is and how it works. Open an account for them.
Goal-based savings: Help them set different goals for which they would need money and teach them to save accordingly.
Importance of giving: This is the right time to teach kids to help those who are less privileged than we are. Let them choose the cause they want to support and make them contribute in their own way.

Teenagers (13-18 years)

Make them manage their Bank Account: Get them to manage their own Bank account through Mobile Banking or even visiting the Branch.

•  Introduce them to investing: Introduce them to the basics of investing when they turn 18. Open a demat account for them and help them get started.

• Get them to contribute towards their higher education by looking for scholarships.

• Help them figure out how to make money: Instill an entrepreneurial spirit in your kids by teaching them how to make money. For example: Starting a side hustle esp. if they are skilled at something, this will help them learn important financial skills.

• Not just kids, even parents need to plan their finances in a more smarter way in order to give their child a more secured future.

Tips for planning finances for your child

• Lay down your goals, both short term and long term.

• Account for inflation.

• Start investing early to benefit from the power of compounding.
• Get insurance for you and your family.
• Build a contingency fund of 6-12 months.
• Consolidate all your financial information in one place.
• Appoint a nominee.
• Review your investment plan periodically.
• Inculcate good money habits in your child.

Things to do when your child turns 18

• Apply for IDs like Passport, Aadhaar and a Driving licence. If documents are already available as a minor, update them with latest photograph and signatures.
• Apply for a PAN and get it updated in bank records.
• Convert the minor savings account to a regular Savings Account by submitting a signed request, latest photo of your child and KYC documents.
• Update your bank records with revised signatures so that your child can independently sign and operate the account.
• Apply for a personalised Debit Card for carrying out ATM and digital transactions. Additionally, you can also get an add-on Credit Card for your child and a Demat Account if you want them to start investing.
• Activate net banking, e-wallet and mobile banking.