Educating children on Money and Banking
Educating children about money and increasing their financial literacy has lots of benefits. Children who remain uninformed about financial matters and who do not develop financial skills early in life may lag behind in financial management skills in their adulthood. Financial skills are as important as academics but are sometimes ignored. These skills are important for a child to make important decisions in his/her career or business during adulthood.
With an upcoming trend of children aspiring to be entrepreneurs, financial skills can be extremely helpful for them. Imagine how good it would be if they would have already saved some amount in their savings account to start their own venture! That would give a good boost to their self-confidence.
Here are some ideas on how we can help children to begin developing financial skills:
Kindergarteners / Preschoolers (3-5years):
- Children at this age can be told what money is, why we need money and why it is important to save it.
- Showing them types of currency – Coins and notes, colors, numbers and pictures on them helps develop their interest.
- Piggy bank is a good start. It’s a good idea to let them count how much money they have saved, let them have different coins and currency notes in their collection to increase their familiarity with currency. You may give the child a certain small amount of money every week for the collection. Eg, a coin every other day or as and when you wish.
- Once the piggy bank is full, or you have saved enough money, then you may deposit the amount in the child’s bank account. A child’s bank account is usually managed by a parent / guardian until a specified age.
- Safety and precaution – the child has to be told to be careful and not to lend or give the money to any other person than his/her parents. It’s a good idea to keep it locked and the child asks parent’s permission to take it.
Primary school kids (6-12 years) and early teens (13-16 years)
A 6-8 year old child is still very young to independently manage money but can be given slightly more responsibility in handling the piggy bank, like telling parents about how much money has been collected every Monday.
Children older than 10 years can be handled the responsibility of managing their own piggy bank but under parent’s observation. They may use the collected money for any important school activity, educational funds, or as emergency funds. They might also make some money through a stall in a community fair which can be a part of the collection! They may accompany you to the bank to deposit the collected money in their account, and do all the formalities of filling up the deposit slips themselves. Similarly they can also fill up checks to withdraw money from their account when needed. They may also check their bank account status periodically.
Safety and precaution – Parents have to make sure the children use and manage their funds responsibly and safely. Parents should make sure that their child is keeping them informed about how and where the the funds are being used.
Charity – A very good idea to impart values in children is to let them use their funds to deposit in charity. That can be a small amount, but would help teach them good values.
Parents can ask school’s help to educate children and request for a workshop for children to educate them about money, banks and responsible use of money.