Personal Finance

Finance can be a child’s play too

R Venkatesan | Updated on November 06, 2019 Published on November 03, 2019

Ingraining the basics of savings will help children manage money prudently

Most parents are worried about their children’s future. Educating them, teaching them the right values, inculcating compassion — the list is long. More importantly, will children manage money judiciously?

Preparing them for this is not a difficult task. It can be achieved by ingraining the basics of finance at a young age. Here are a few suggestions to meet this objective.

Tell a tale

The best way to introduce financial concepts to children below five years is through fables such as The Ant and the grasshopper, The three little pigs and The thirsty crow. For instance, in The Ant and the grasshopper tale, the lesson can be “for tomorrow's success, you have to start working today, and those who do not plan for the long term are doomed to fail in life”.

In its ‘Financial Education’ initiative, to teach general banking concepts to various target groups, including school-going children, the Reserve Bank of India (RBI) has come out with study material (available on its website), which include story books such as Raju and the Money Tree, Money Kumar and the Monetary Policy, Raju and the Sky Ladder, Raju and the friendly ATM and Raju and the Debit Card. The titles explain monetary concepts to young inquisitive minds with illustrations.

Piggy bank

A child’s first introduction to savings can be through a piggy-bank, with parents as the first contributors. Gifts from friends and relatives can then be added to the kitty. Parents can take the kids for shopping with proceeds from the piggy bank and make them pay for items they wish to buy. If the money is insufficient, the child should be made to get something less expensive or wait until he/she saves more money.

If the children want to spend the savings on worthless items, allow them to. They would eventually realise that they wasted the money and, in the process, learn the art of spending effectively.

Training with apps

There are apps available online that teach kids money management skills. ‘My Piggy Bank Savings Tracker’ app is one such.

It allows children to set goals and track their financial progress.

To start with, the children can specify the purpose, the cost involved and the investment amount. It also allows them to save money in piggy banks and withdraw to meet the goals.

The children can visualise the progress and challenges in meeting the target. The app also issues due date alerts for multiple goals with images.

Kids savings account

With most banks allowing children to open savings accounts, you can also consider assisting them to open an account to manage their finances. For example, HDFC Bank’s Kids Advantage account offers facilities such as debit card, education insurance cover, money maximiser and free net banking. It gives free education insurance cover of ₹1 lakh in the event of death of parent/guardian.

Under the Money Maximizer scheme, if the kid’s account exceeds ₹35,000, an amount above ₹25,000 would be automatically transferred to a fixed deposit of one year and a day. Similarly, Canara Bank’s Junior Savings Account offers a host of facilities to minors above the age of 10.

To encourage the savings habit among school-going children aged 10 and above, the government has allowed schools to open the Sanchayika scheme in post office savings accounts.

Published on November 03, 2019
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