When is the right age to talk about money with kids?
It is important to explain your child that it costs money to buy something and we can't have everything we want.
You just need to identify your child's ability to grasp the idea and proceed accordingly.
By Leena Parwani/Personal Finance
Published: Sat 13 Jan 2018, 7:00 PM
Last updated: Sun 14 Jan 2018, 10:18 AM
Money is important and it is vital for you to teach your kids about it as early on in life as possible. There are different ways in which children of different ages perceive money, but if you start explaining the financial concepts early, your child will definitely stand to benefit. There is no perfect age to talk about money with your kids. You can start with handing a piggybank to a toddler or you could open a savings bank account for a teenager. You just need to identify your child's ability to grasp the idea and proceed accordingly.
Talking about money to a toddler
Aarti Sinha, a 27-year-old school teacher, taught her two-year-old son to use a piggybank simply because she wanted him to stop putting coins in his mouth. The enthusiastic toddler took to the idea pretty quickly and whenever he saw any coin lying around, he promptly picked it up and put it in his piggybank. Aarti decided to reward her son for doing this, and every time the box filled up, she took him along to the store and he bought a bar of his favourite chocolate. This made him value money and also helped him to understand the importance of saving.
Talking about money to a six-year-old
When your child is a little older, introduce him to the concept of affordability. Explain to him that it costs money to buy something and we can't have everything we want. A good idea would be to take him to a toy store and ask him to choose just one toy. He may want more than one, but tell him there is a limited amount of money that can buy just one toy. This exercise will teach your young child about the importance of affordability and the value of every dirham.
Talking about money to a 10-year-old
By the time your child becomes 10, he is old enough to handle small amounts of cash by himself. So start giving him allowances each month and explain the idea of budgeting. Tell him that this is all the money he will get and he has to separate the amount in parts for all that he needs. If he buys lunch from school every Friday, ask him to keep a sum aside for it, if he buys a new toy each month he must keep another sum away for that, and so on. Explain to him that if the money runs out and he still needs to buy something, he will have to wait till the next month to get it.
Talking about money to a teenager
A teenager can understand the more complex concepts about money. It would therefore be a good idea for you to introduce the banking system to your teenager. Under your watch, he can have his own bank account, cheque book and ATM card. The bank account will make him understand the financial matters more clearly and inculcate a great amount of financial discipline in him.
The bottom line
So as we can see, it is important for you to start talking about money with your kids early on. This is not a one-off conversation and it must continue throughout their childhood. As seen in the aforementioned points, the nature of the conversations and the exercises change with time, but the aim of financial literacy remains constant. So rather than feeling that your child is too young to understand money, introduce the concept to him in a way that he understands. This will be interesting and beneficial for both of you.
The writer is CEO of iCareinsure, Insurance Brokers DMCC. Views expressed are her own and do not reflect the newspaper's policy.