Relationship with money is one of the most important relationships that you can nurture for your overall well-being. Unfortunately, by the time people realise the true importance of this relationship, they make many costly mistakes and lose many good wealth creation opportunities. All this can be avoided if we can start with our children. We can utilise their natural curiosity and openness towards new things to introduce the concept of money in a fun way. This article explains some money tips which you can apply right away to your kids to help them develop a healthy relationship with money.

#1: Involve kids in money discussions:

Some parents think that money discussion is a strict no-no for children. As parents, if they are earning well, they should not bother kids with all this stuff. This is a wrong approach. Kids who are not involved in money discussions may develop discomfort or, worse, aversion to money later on in their life. Not talking about your money anxieties openly with your family members can also create a toxic environment in the home. Kids can very well sense and be impacted by those toxic vibrations. A better approach is to start opening up on money matters on the dining table. Give them some background of your upcoming essential money decisions. It may be something like making a new investment, moving into a new job etc. You can also share the process – how you went about researching the investment, how you paid, the adviser you consulted etc. This will bring your kids into a much-needed rapport with money.

#2: Differentiate between “wants” and “needs”:

Imagine yourself walking with your child in a mall. When the child asks for this and that, you can ask her to check whether she really needs it or just wants it. The important thing is to subtly teach the kids to catch the impulse as it arises in their minds. This trains them to differentiate between an actual need vis-a-vis a want. You can also do the same thing when kids see an advertisement on TV and express a desire to buy the product. Slowly but surely, these interventions help tune your child’s subconscious mind. Later on, even as adults, this question (need vs want) can automatically pop up in their minds and help them stay focussed and not make impulsive decisions.

#3: Allow children to earn and save money:

As children mature to a certain age, it is wise to give them some pocket allowance. The allowance should also accompany some coaching from you as a parent like making a budget, keeping an expense diary, setting money aside for any gifts or purchases etc. You can also mutually decide to hold a periodic status update meeting with your child. This will help you both see how things are going, whether they are on track with their budgets and any needed course corrections. You can also incentivise them on meeting their saving targets. All this can be an enjoyable way to help kids take complete ownership of their money.

#4: Open a bank account for your child:

Opening a bank account can be a significant next step in the money journey of the child. You can make it sort of an event to celebrate the accomplishment that your child is now an account holder and is part of the country’s banking system. It is an excellent option to take him to the bank and do the account opening formalities to give her the feel of what a bank looks like. You can show her the various counters/sections in the bank and explain how they work. Once the account is opened, you can also demonstrate how things like a debit card and chequebook work, reading a bank statement, etc. This will further develop her understanding of banking operations.

#5: Introduce them to simple financial concepts and products:

You can find many opportunities in a typical day to bring into a child’s awareness simple money concepts like saving, power of compounding, asset allocation etc. The child may not understand it entirely at that time. But later on, as they start managing their financial affairs, they will be able to connect the dots to all that you taught years back. The best way to teach these concepts is to take the kid to a live environment where you do money transactions – like a supermarket, bank or ATM. As children are interested and ask questions, you can solve their queries and at the same time also give them an overview of financial concepts and products.

#6: Teach them the importance of insurance and emergency fund:

Teaching kids about investments is not enough. You should also tell your kids the importance of saving some money for a rainy day and protecting themselves with proper insurance coverage. At this age, it is sufficient to touch upon the concept of insurance and how it works. You can share your own example by touching upon the different insurance policies you have purchased and some brief details on the coverage offered by those policies. This will give the child a sense of protection and instil in them the feeling of being responsible to first protect the family’s interests and then think about saving and investing.


Teaching simple financial concepts to a child is a very delicate process. It is like sowing seeds in the child’s fertile subconscious mind. Over time, these concepts will help develop a firm foundation for the child to manage her finances from the day she starts earning and save her from costly financial mistakes. And the child will thank you for teaching these financial concepts in her formative years. As a parent, that definitely is worth the effort, isn’t it?
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