To say that these are tough times would be an understatement of the decade. With rising fuel prices, escalating cost of living and the ever increasing divide between the have and the have-nots, it is critical that we teach our kids to value money. I think the biggest skill parents can pass on or teach their kids is NOT “how to make money” but “how to manage money”.

Here are 5 simple tips to teach your kids about money management.
Talk about Money
Yes, talk! In families and especially in the Indian families, talking about money in front of the kids is rare. Parents keep all the money related conversations for the time after the kids sleep. Today when our homes and our possessions can be dependent on high interest raking loans then it is definitely a good idea to keep the kids tuned in.
When my daughter was just a year and a half old, she knew that mama gets to take things from store only when she gives money to the shopkeeper. So we should give credit to our children’s intelligence and talk about money management from the early years. Kids often watch us spending money but never when we are making our family budgets, taking about interest rates, discussing inflation etc. Unless we want our kids to remain clueless about financial planning, it is important to include them in these conversations but in an age appropriate way.
Make Money Fun
If you find talking about money with kids difficult then use play and games as a way of teaching them about money. Next time you go to the bank take the kids with you. Show them where the money is deposited, how it is counted etc. {Bonus: Your child will skip the “my dad is an ATM” t-shirt} Try to use cash instead of cards whenever possible, it is not only a smarter way of spending money but also makes the concept of “MONEY” physical in their minds.
You can also play a lot of money games with kids
- Identifying and sorting the coins and notes into various denominations
- Use toys like a cash register to explain the concept of money and maths
- If kids can do basic addition-subtraction then play “making change”. Give a Rs 50 note to them and ask for change in coins.
- For older kids use toys like monopoly, business etc . These money games not only teach about money but concepts like taxes, insurance, ownership, loans etc.
- Use Apps like Save! The Game which teaches kids about needs vs wants or Kids money which helps kids manage their allowances.

Give an allowance
Giving a weekly/daily allowance is a great way to teach kids about money. You can make the kids work for the money by doing simple chores around the house and get money for them. Younger kids can help in clearing the dinner table, putting their toys, gardening, pet care and lots more. Older kids can be responsible for grocery shopping, car washes, various errands, babysitting etc. Fix an age-appropriate allowance for these chores and give them freedom and responsibility for their own money. This means that the allowance should be used by them for some of their needs but they are also given freedom to buy what they want. So they can buy candy, chocolates etc from their own money but if they covet a new pencil box or a game card they have to manage from their allowance only.
Giving an allowance also encourages saving money. Give piggy banks or money banks to your kids and ask them what they want the most for their birthday/christmas/diwali etc. Then ask them to save money from their allowance and at the time of the occasion when the piggy bank is opened, promise to match the amount in the piggy bank with your own money. Persistence and assertiveness is the key for managing children’s allowance, with kids and money, so whether you are dying to bust the bank to get the latest toy for your son, restrain and wait till the child achieves the goal.
Needs Vs Wants
Our materialistic culture nowadays makes the lines between necessities and luxuries quite blurry. Over the top birthday parties, extravagant gifts and exorbitant return gifts, yearly world tours, iPad for a four year old and so on. Our kids have to deal with a lot in their peer group environment. Unless you want them succumbing to peer pressure and start emotional blackmailing or worse to achieve these things, it is important that you explain them the difference between ‘needs’ and ‘wants’.
If kids understand that buying school books and groceries are needs and watching the latest movie or spending thousands on a new toy is a want then you can explain to them about careful spending on the needs and planned saving on the wants. By learning about the real value of things in their life, they will make informed spending choices.
Be their role model
We are our children’s best teachers and no strategy in the world is going to make a better money manager out of them than us. If we show them the right way of spending and saving money, budgeting, planning, organizing bills etc. then it will be a cakewalk for our children to imbibe these values. The only word of caution would be : Don’t go overboard! If you are all militant and “my way or high way” with the kids then you can bet your every last rupee that they will do just the opposite of what you want.
Accept an occasional splurge, some mistakes along the way, some lessons learnt the hard way and yet be their pillar of strength when it comes to helping them with money matters. As soon as possible have kids write a daily journal with a column about their daily spend. My father maintains daily journals with every his last rupee accounted for and has done so for the past 30 years or so. His financial planning skills are something I hope to imbibe and pass on to my daughter some day.