8 ways to build Financial Quotient in your child

It’s quite evident that, one who manages his Money matters well succeeds in life. Money management is the backbone for the success of any person, corporate or nation at large. Money management has to be taught to the children consciously. It is an excellent decision making skill. As responsible parents are we enriching our children’s mind with the right value systems towards money? Value seeding is a vital part of conscious parenting and value for money is an essential aspect of raising independent children.

Mother and daughter putting coins into piggy bank - Stock image

Over the years, as a nation, our spending culture has been restructured. Traditional theories of economics explained the power of savings while modern approaches emphasize the functioning of an economy through spending. With this transition, there have been many conflicts within the families. The generation gap speaks this loud.

In the modern day lifestyle,

  • Products for daily routine are readily available,
  • There is an abundant supply of these products. In fact, mass supply has taken the front seat.
  • Variety of products has increased.
  • Too many choices are available for just one need.

To add to this, plastic money, excessive use of credit cards and online shopping, etc. has taken away the control over our expenses. Transactions with banks are also confined to Net banking. Most of the transactions are done on our palm top through mobiles. In this scenario, it is quite challenging for parents to introduce the Financial Quotient in their children. Children understand basic math concepts as early as 2 to 3 years. When they are 5 to 6 years old, they develop the cognitive skills necessary to understand basic monetary concepts, such as:

  • identifying coins & notes
  • counting them,
  • differentiating and categorizing them,
  • Things they want to buy and match with the money they have.

Apart from acquainting kids with the basics of economics, money lessons have many other benefits. Researchers say, “If youngsters can learn how to spend wisely and delay gratification, they will develop patience and planning skills in other aspects of their lives.”

Let’s explore some ways how we as parents, can induce and trigger the Financial Quotient in the tender minds of our children.

  1. Explain how money works. Children are curious to know many things. When at an ATM, have you heard children asking their parents “do ATM’s print money?” “Does god put money in the ATM?” “Do elder’s blessings convert into money in ATM’s?” Innocent questions from children are fun to hear and cherish. At the same time, it is our privilege to help children understand facts. Explain in simple logic, how money is created, available for us to spend on things we need. Describe how money is earned. Tell them in detail about your profession, the kind of work you do. Explain the different occupations and the earnings associated.
  2. Involve your child in your shopping for groceries. As early as possible, right from planning and making a list of things to buy, do encourage them being a part in the buying process. Talk to your child about the things you need and why. Take him/her to the shopping mall/ store. Ensure he/she helps in choosing stuff as per the list you’ll collectively put together earlier. Help him read the price of each item and also the expiry date. If your child chooses an attractive thing, firstly ask whether the thing is a necessity. Explain the extra cost involved. Help him to evaluate whether he needs to spend money on it or he can do with an existing alternative. Help the child understand the difference between want and need.
  3. Be an ideal Role Model. I always mention that Children are excellent imitators. They pick up skills from family. Children follow the actions from parents. If your child witnesses that you are splurging on unnecessary things it’s easy for him to pick the same. Your child must be able to look onto you as a person who saves hard-earned money and is not a spendthrift. Keep your monetary tasks organized and make sure you never nag about money in front of your kids.
  4. Maintain an expense dairy. Help children have an expense diary of their own. For example, expenses on stationary, toys etc. every time they buy stationary ensure that they write it down in their expense diary. At the end of the month have an analysis and help the child to make a note of the total expenses. Similarly, an annual expenses analysis can be done.
  5. Involve your child in setting monetary goals. While setting goals for yourself and your family for the whole year, involve your child. Leisure goals, holiday goals and the costs involved can be discussed as a family as a whole. Introduce your savings goals. With the analysis of the expense diary, help the child as to which expenses can be cut down or replaced. This analysis can aid in setting goals for the next month or year. As they grow, have a bank account of their own. Encourage them to go to banks for enquiries and deposits. A sense of responsibility prevails.
  6. Explain the difference between reality and fiction. The TV commercials easily influence children. The jingles and the visuals are enough to kick in the idea that they need a product. Help them see the reality. E.g. packaged foods. Explain to them the harsh realities of packed food. Help them not to venture into impulsive buying, induced buying, etc.


             7. Don’t hesitate to appreciate your child whenever he exhibits proper money mannerisms. Encourage their innovative ideas. Do implement the proposed idea if feasible.

             8. In simple terms explain to them the current scenario of our economy. Explain to them the relationship between the value of our Rupee and Dollar. Talk about the reasons for the depreciation of the rupee and the measures that can help. As an individual household, how can we do our bit to help stabilize our economy. It can be as simple as:

  • Choosing localized products for household consumption.
  • Encouraging use of indigenous products. Insist on toys, pens, pencils, compass, clothes, and watches etc. of Indian manufacturers. A sense of nationalism prevails.
  • Planning for domestic holidays too; as we need not shell out in dollars. Our country is blessed with a lot of tourist destinations. With a rich history and culture, several monuments and forts can be explored. I am sure many parents might have taken their kids to Thailand, Singapore & Malaysia but would not have visited places like Ajanta and Ellora caves, Hampi, forts and palaces in Jaipur, Maharashtra or Hyderabad.


Word of Caution: Don’t let kids feel that money is everything. Tell them it is only a Means to an End and not an End in itself, lest they become money chasers. Children need to know that money is the result of hard work and planning from childhood through right education. Efficient financial planning can help you lead a contended and stress-free life within your available resources. Empower your child with financial freedom for the rest of his life.

Medha Kedar Tonapi,

Health in your Mind

Psychotherapist, Life Coach,

Parent Coach.

Picture Credits: Indian Express, Financial Express, TripAdvisor

, , , , , , , , , , , , , , , , , , , , image-cta

No Responses

Leave a Reply

Your email address will not be published. Required fields are marked *