Personal Finance Tips : Age 4 -6, How to Raise Money Saavy Kids


 Hi Friends, this post is very close to my heart as it summarizes my varied experiences spanning decades.

These are my personal views based on my life experiences. I recognize that we all have our individual expectations of life based on our circumstances, culture, values and phases of life.

One of the most important skill you can impart to children is  value of money and personal finance. 

It has become the need of the hour to make all children aware of finances and security. Alas, this education is surprisingly not imparted by the school system, a mind-boggling mystery. 

So, it is up to parents and guardians to make sure that the kids learn personal finance from an early age. 

The age of 4 is a good age to start. 

Tips to teach children about personal finance in the age group 4-6

1● Start with coins.

Little children are fascinated by coins. They might not appreciate or understand the value of paper currency at this age but they will like the feel of a coin in their hands.(Age4)

Teach them the value of coins by telling them the various denominations. 

2● Reward them with a coin whenever they compete a task given by you. 

For example,  helping clear the dining table, completing their homework on time, putting away their toys after play, good behavior etc. Here, I must add, all chores need not be paid as many people think, it’s the duty of children to help around the house. So be selective and reward them for a few chosen tasks.

You will be surprised as to how quickly they learn and look forward to the rewards!

3● Give them a Piggy Bank. 

A Piggy Bank is an institution in itself. This has been here since time immemorial and will forever remain in fashion. 

If you can’t afford a store bought PiggyBank, just DIY one. Pinterest is a good platform to get ideas for a DIY Piggy Bank.

4●Teach your children to use the Piggy Bank.

Practice what you preach. When they see you saving the coins, they will get excited and replicate the actions. Also, their personal Piggy Bank will give them a sense of ownership. 

 Whenever they get coins, encourage them to save. Explain that when the Piggy Bank is full, the money can be used to buy things that they want.

5●By age 5 and 6, kids become aware of the value of paper currency. 

You can explain the value of various denominations. This, I realized after an incident that occurred with me in the year 2011.

The incident that made me aware of kids understanding of currency/money

A senior retired ex colleague was visiting out city with his son, daughter in law and two granddaughters. 

The son is currently employed with a public sector bank in India, and had recently got posted to Gurugram from Jammu.(These are two cities of India) This Incident dates back to 2011.

My husband decided to host them and we took them for lunch at a smart, elegant multicusiene restaurant. 

As we were bidding them goodbye,I was asked by my husband to give both the granddaughters Rupees 500 each. Though, this family was not particularly close to us but my husband was in a generous mood. It is customary to give small sums of money to kids in India on occasions especially if you meet them for the first time.

We were not close to this family as they were just acquaintances and we met after almost a decade. Only the elderly husband and wife were known to us and we met the son, daughter in law and grandchildren for the first time. 

Though, I was not keen to part with the money as it seemed a big amount in 2011. The elder granddaughter was 6 and the younger one 2 years of age.

Rupees 500 is around 7 dollars. It might not seem a large amount to some people  but for me to part away with 14 dollars for someone not close in the year 2011 was extravagant. For Indians, it is  big deal.

I got a shock of my life when the 6 year old after 5 minutes made up her mind and took me aside to talk in private. Everyone else was busy with the customary goodbyes and thanks. Meanwhile, she decided to give me a piece of her mind. 

I will never forget what she said ” Listen, I don’t  accept less than 1000rupees ( around 15 $) from anyone. Here, I have decided to make a concession for you, and I am making it very clear to you” leaving me completely dumbfounded. She was matter of fact, bordering on the rude. I was in a fog after that and mumbled goodbye. As I tried to figure out what actually happened, one thing is clear that by age 6, kids are very clear about their money. Or is it the atmosphere of money talk in their homes?

Over the years, I narrated this Incident to people and this is the first time, I have decided to share it online. 

The clear message of that kid in 2011 has made me realize that children are clear about money by age 6 and we should teach them about saving and investing in simple terms.

We have not been in touch with this family but I am planning to find out about the girl who decided to admonish me. What subjects did she take up in school? what career choices did she make? what is the quality of her life now? Did her awareness of money at the age of 6 land her with a good future? These questions have been on my mind lately and I have decided to make a case study out of it.

My sole purpose to share this information is to understand the psychology of kids, about their relation with money and how can we instill a healthy personal finance culture at this young age.

I have come to understand that earlier the better in case of personal finance. Parents and guardians should take up these simple tips to set their kids on the path to a secure financial future. 

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