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How to teach Children about Personal Finance?

CA Umesh Sharma , Last updated: 26 February 2024  

Arjuna (Fictional Character): Krishna, as we navigate through the complexities of finance in our daily lives, it strikes me that we were never formally taught about managing money. For our children, how should we fill this gap in their education?

Krishna (Fictional Character): Arjuna, you're right. In our Indian education system, there is a lack of focus on personal finance and money management. Therefore, it becomes a family's responsibility to equip their children with this crucial knowledge. From their tender years into adulthood, we must guide them through the various stages of financial understanding, helping them to recognize the value of money and how to use it wisely.

Arjuna (Fictional Character): Krishna, What are the things that should be taught to children about money when they are growing up?

Krishna (Fictional Character): Arjuna, There are various stages when children grow. At every age, the maturity of child is very different and hence it is very important for the parent to understand what are the things to be taught to their child as the child grows up.

How to teach Children about Personal Finance

1. Toddler Age- 4 to 6 Years

  • Identification of currencies, denominations coins just like playing games for identification of shapes and sizes.
  • Importance of a piggy bank.

2. Pre-Primary School Kids (7 to 11 Years)

  • Taking them to shopping to help them understand pricing of products.
  • What is Bank Account and How does it function !
  •  Knowledge of their school fees
  • Meaning of debit and credit cards
  • Opening a bank account in their name. For Ex- Sukanya Samruddhi A/c for Girl Child.  

3. Primary School Kids (12 to 14 Years)

  • Showing them budget for their own birthday party to make them realise the importance of spending wisely and making decisions on how to spend and save in the given budget.
  • Importance of Saving Money and realising importance of Every Penny Saved is Penny Earned.

4. Secondary School Kids (15 to 18 years)

  • Importance of investing.
  • Motivate them to invest the money from pocket money given to them.
  • Teaching them concept of compounding.

5. Adult (18 - 22 years)

  • Dangers and Safety of UPI and Internet banking.
  • Teach them how to do financial planning
  • Concept of Stock Market, risks associated with F&O Trading especially Options Trading.
  • Make them realise, just like - Rome was not built in a day, they cannot become rich in a day or a month.

Arjuna (Fictional Character): Krishna, why is it necessary to tailor these financial lessons to each stage of a child's growth?

Krishna (Fictional Character): Arjuna, Since schools often overlook this vital aspect of education, it’s essential for us to step in. Just as we wouldn't expect a young sapling to bear fruit immediately, we cannot expect our children to understand and manage finances without a step-by-step approach. By nurturing their financial acumen from a young age, we help them grow into capable adults who can confidently handle their wealth.


Arjuna (Fictional Character): Krishna, with these stages of financial learning laid out, what should one learn from this entire process?

Krishna (Fictional Character): Arjuna, the most important takeaway is that patience and continued learning are the cornerstones of financial wisdom. As parents and guardians, our role is to be the facilitators of this wisdom. By instilling these values and lessons in our children, we not only prepare them for the financial aspects of life but also empower them to make informed decisions that can lead to a secure and prosperous future.

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CA Umesh Sharma
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