Financial Lessons for Kids: What & When?

If you ask a 5 year old “where the money comes from”, most likely his response will be ATM or Purse. The kid is only saying what he has observed. He does not see a correlation that you invest your body and time to earn decent living for them.

Children today are more demanding and inquisitive. You can see in their behavior. They will blackmail you for an ice-cream for doing homework, they will roll all tears for a toy or a doll and make sure that you purchase it out of embarrassment. They want multiple dresses, stationary, shoes and everything moment they see it. And if you say NO, deep down they will start thinking “Are we poor?” or “”do my parents love me or not”?

Financial Lessons for Kids
Image courtesy of Stuart Miles at

Let’s see what and when to tell a child about money.

Age 5-7 Aim to teach: What is money? How his Daddy gets money to home.

Lesson 1: Ask him what is money? Show him the notes and coins of all denominations and tell him that everything has a cost which is money. The ice cream, the dress, the school, the van, the maggie, the fruits, the vehicle, the petrol, the fan, the electricity, the band aid, the water park etc. etc. so money is through which goods and serviced are exchanged. We cannot make school, diary milk at home. So money is important.

Also Check Infographics – 10 Lessons to teach your kids about money

Lesson 2:Ask kid does he/she misses you when you go to office? Tell them you miss them too but in order to earn money you need to go to office and work hard. You work for full month then you get some money which will be for entire month and this is the money office stores in the ATM which you can withdraw when it is needed. Show him that it is not the ATM which gives money, but it is the hard work and time you or your spouse devotes towards work. Instilling the relation between hard work and money is the crux.

Age 7-9 Aim to teach: Value of Savings & Investments

Lesson 3:  This is the time when you can give some cash to kid to handle on own. You can give him a pocket money and tell him to that if he wants a picnic out on weekend he has to contribute. Or ask him what he wants… suppose he says a tablet, tell him that he needs to save X amount for Y months to get the tablet. When you shop something tell him to count and pay. Let him calculate balance and denominations of notes to pay. This is not one time but a routine.

Lesson 4:This is the time you sit with your kid and teach him about daily or routine expenses. You tell him that grocery is routine but vacation or expenses for higher education are not. Show him that you are saving for these long term goals. Tell him the difference between saving and investments. Explain him the non-technical way the concept of interest and accumulation (the grasshopper and the ant story). Share stories where people started savingand became self-reliant by reaching their goals without difficulty.

Age 9-13 Aim to teach: Basic concepts of Investments &Debt

Lesson 5: Teach them the power of compounding and interest concept in simple way. Tell them about savings bank account, recurring deposit and fixed deposit. Tell them how these avenues help to build corpus for future use.

Lesson 6: Teach them dangers of debt. Show them how home loan and credit card works. Correlate method of savings and debt. Tell them how you contributed maximum form your savings to lower your loan amount and pay less EMIs. Do role play by giving them small personal loan for their need and deduct EMIs from the pocket money.

And before you teach….

1)      Show respect for money in your financial behavior.

2)      Make wise investments & purchase decisions.

3)      Put some time to educate yourself with financial concepts.

4)      Lead in the eyes of your kid by setting examples.

5)      Be patient with kids. Do not expect Warren Bufffet or Benjamin Graham attitude from them on day 1.

Being a parent I am eager to learn what new I can teach my kid and how? Do share your stories- how you tackle your kid or may be how your parents tackled you? Waiting for your comments.

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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.


  1. Very nice article. Teaching value of money to kids is very important. This remembers me of my childhood days, when we were around 12 to 13 years old; my Dad involved me and my sisters in making monthly home budget. We clearly know what our total monthly income was and what are all the monthly expenses need to be met and how to avoid the unwanted expenses. My Dad also made it point that each month one of us will handle the money and who ever manages the money within the budget got some gifts.

    • Dear Raju Bala,
      Your father did amazing work – right now the problem with young people is they don’t appreciate importance of budgeting.

  2. And if you say NO, deep down they will start thinking “Are we poor?” or “”do my parents love me or not”?

    they dont have brains to think like that. it is you thinking like that afraid and embarrassed in shop when your child is crying like mad 🙂

    if you have guts and not so soft and afraid of psycho effects, you can slap that crying idiot and shut the mouth first :p

    one thing my cousin wife did is very smart. i also try to do
    whenever her child ask for something she says it costs 100rs , we have to work and earn it.
    she makes her son help here and there in household work and ask him to save it.

    again, not every child is like that boy

  3. Thanks, it’s nice and informative. Yes, my doughter has same nature and talking paisa to ATM se ata hai. I enjoy with this article & compel to think about coming time, planing etc.


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