How to teach children about money

You don’t have to be Warren Buffett to raise a financially savvy kid. You don’t even have to be good at math. Then how do we do it? Establishing a conversation about dollars and rupees and keeping it going as your child grows is a possible way. Parents are often scared to talk to their kids about money. Some lessons mean admitting mistakes; others signal unattainable goals. But the consequences of not imparting those lessons on your own kids could be direr than ever. Unlike grandpa, who may have a pension and employer provided health insurance — most children now need to understand much more than basic budgeting.

Kids will need to understand how to save for their own retirement, manage health care costs and even cope with diminished Social Security benefits. Sounds like this is jumping the gun? It’s not. Proper preparation of your children, even at a young age, can start them down the path of a successful financial life. Children start learning about money long before their first savings account, job or credit card. Begin the conversation even before they’re in boarding schools by talking about work and money. Avoiding the subject until your child needs a bank account can make the conversation hasty and confusing.

A trip to the grocery store is a good time to explain price comparison, value and inflation. An ATM stop offers a chance to explain that money doesn’t actually come from a machine. You can discuss earned income, investment returns and even inheritance. Opening bills is a chance to talk about payment for services, credit card debt and interest rates. Children need to be taught about debt, specifically loans and credit cards. Talk about insurance with teens, especially as they learn to drive or as you’re selecting what health care options are available to your family. Children should learn that money doesn’t always need to be used for them. It can also provide assistant to others. Don’t just write the charitable check. Get the kids involved in the process by asking them to pick and scrutinize charities.

What I call best school is one which teach children not only academics but principles to lead a good life that includes value of money.

Don’t get frustrated because your kids don’t take your advice. Kids need to make some financial mistakes in order to understand the consequences. Let kids set their own financial goals, say financial advisers, or they’ll never learn the basics and discipline.