look news india
New Delhi. In the modern era, full emphasis is given to science, mathematics and languages in school education, but the subject which a person has to face at every turn of life – i.e. Money Management (Personal Finance)—No formal text of it is taught in general courses. Often when youth start their first job at the age of 22-25, they are left empty handed at the end of the month due to credit card debt, mindless online expenses and lack of understanding of budgeting as soon as the salary arrives. Financial experts and child psychologists believe that the best age to teach children the value and proper use of money is 15 years (Teenage) it occurs.
The age of 15 is the time when children start thinking logically, are able to differentiate between their individual needs and desires, and connect directly to the digital world through smartphones. If parents teach their children the basic principles of money management at this critical age, they will not only avoid the debt trap in future, but will also be able to move towards becoming financially independent and wealth-creators at an early age.
At this age, children often get attracted towards expensive gadgets, branded clothes or café culture due to peer pressure. If they are not made to realize the value of money, they mistake money for being an ‘unlimited resource’.
Main benefits of imparting timely financial literacy to children:
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Understanding the difference between ‘Need’ and ‘Want’: Children are able to understand which thing is their basic need and which is just a wish for show.
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Avoidance of loan and EMI risk: In this era of credit cards and buy-now-pay-later (BNPL), financial discipline is the only safety shield.
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Take advantage of the power of compounding quickly: Youth who understand the importance of investment from the age of 18-20 can create a huge financial security by the age of 35.
Parents should teach these 5 basic rules to their children in a very practical and interesting way in the home environment itself:
1. Fixed Pocket Money and Budgeting Rule (50-30-20 Rule):
Instead of giving money every day to children, give them a fixed monthly pocket money. Also teach them the simple 50-30-20 rule:
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50% needs: Stationary, important books or school projects.
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30% Personal Hobbies: Outings with friends or favorite snacks.
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20% mandatory savings: This part should be deposited safely in a piggy bank or bank.
2. Digital Payments and Junior Savings Account:
At the age of 15, have children open a ‘Minor Bank Savings Account’, in which they have their own debit card. Teach them that UPI PIN, card CVV and OTP are not shared with anyone. Get them into the habit of tracking monthly expenses by viewing the passbook online.
3. Teach control over impulse buying with the ’30-day rule’:
If the child insists on an expensive phone, video game or shoes, instead of immediately refusing or buying it immediately, tell him-“Let’s wait 30 days on this.” In most cases the attraction towards that object disappears after 30 days. This rule teaches them financial discipline and patience.
4. Beginner’s Lesson in Compounding and Investing:
Explain to the children that the money kept in the bank or piggy bank decreases due to inflation, whereas if invested in the right place, the money works automatically. Introduce them to the basic principles of Recurring Deposit (RD) or Mutual Fund SIP. Show them how saving ₹500 per month can grow into a huge sum with interest in a few years.
5. Include children in household budget discussions:
Have your 15-year-old sit with you while you figure out the monthly grocery bill, electric bill or planning the family’s annual vacation. When children see how the family spends money based on priorities, they become more sensitive and responsible for the household’s financial situation.
It is not enough to just teach children to earn money, but teaching them to save, grow and balance the money earned is the biggest gift of parents. The seeds of financial discipline sown at the age of 15 go on to make them successful, stress-free and self-reliant citizens.