Modern youngsters need to be educated about money

Do teenagers know how to handle money? The answer from two survey conducted in the US is yes and no.The Teens & Money Survey, 2007 conducted by Charles Schwab the US financial services major found that 89 per cent of teenagers surveyed said that they wanted to learn how to make their money grow. Yet, only30 per cent believed their parents were making sure they learnt the basics of smart money management.Now, Charles Schwab has surveyed the parents in its Schwab Parents & Money 2008 Survey found that 67 per cent of parents believed that learning about money management was not a top priority for their kids.

Are Indian children any better? “Teaching children the value of money is a big concern today. But I’m not sure how many people understand it because we’re living in an era of instant gratification,” says Amar Pandit, director, My Financial Advisor.

That’s why Pandit is launching financial education programmes for children by July-August. “The right values about money should be inculcated from an early age,” he says.

Velma Fernandes, who works with a bank and has two boys aged 15 and 13, agrees. “It’s very necessary that children know the trouble we go through to earn money. And when they grow up, they need to learn how to spend it too. An occasional luxury is fine but they can’t make a habit of it,” she says.

Where do you start? Most importantly, feels Pandit, delay the gratification and not meet every demand your child makes. He recounts how a wealthy client has made an art of this, teaching his kids patience thereby. “If his kids ask for a pair of jeans, he’ll say ‘I can’t afford it right now, let’s wait for a week’,” relates Pandit.

Now Pandit, who was very generous with his five-year-old daughter, is learning to say no too. “I’ve learnt to control myself. It’s important for children to realise that money doesn’t grow on trees,” he says. It’s also vital to teach your kids to save. You can start them young with a piggy bank. Set goals for them like making them save for something they want.

As kids grow older, you can give them an allowance. This will not only teach them how to spend but also how to track and budget their purchases. Teach them to save some money too.

Pandit believes children must not just learn to save money but earn it too. You can pay them for doing chores, for instance. “It’ll get them into the mindset where they know they have to work for their money.,” he says.

It’s important to educate your kids on the basics about banking and loans too. Like Fernandes, who taught her younger son to deposit cheques when he was in Class 5. “If you teach them when they are young, it becomes a habit. After all, anything, good or bad behaviour,is a matter of habit,” she says.

And remember, your kids will emulate your behaviour so practice what you preach.