When Shweta Singh (name changed) filed her taxes for the first time after being employed, she recalls the experience felt more daunting than her job interview. “Yes, I sought help from a professional but I had to walk that extra mile before I could reach a stage where I had an understanding of how my taxes were weighing in on other aspects of my finances. The journey also led to the realisation that our education system places negligible emphasis on money management skills.”

Shweta’s experience isn’t an exception. Given that the education system in India keeps children light years away from finance basics; many have to go through a painful process of hit and miss before they can fully grasp concepts of taxation and investing. Unsurprisingly, sometimes the experiments in these arenas arising due to the lack of knowledge also cause many to suffer financial losses. 

Elora Chattopadhyay, a teacher based in Kolkata rues that most schools and colleges in India do not value the importance of teaching money basics to children from an early age. “At the end of the day it is a life skill and it is a misconception that knowledge of finance should only be reserved for adolescent students who choose finance after tenth standard. You would never hear a science student in India being taught about the nuances of taxation even though nobody – irrespective of their educational background – can escape paying taxes.”

The benefit of starting early

Chattopadhyay opines that postponing teaching children about money basics can make the process harder for parents as well as the children. “It is common in Indian households do give small allowances to children from a young age. For parents that can be a great starting point for teaching kids to value money. For instance when my son was young, I made it a point to teach him that for anything new that he demanded, he would have to perform a household chore for a certain number of days to ‘earn’. That ingrained in him the idea that money is a limited resource and that it should not be wasted.”

However, should parents leave money conversations for a later stage, it may be hard for the child to unlearn whatever understanding they may have formed about money in their lives. “Development of money management skills also entails working on decision making skills and it is a process. A child who may be extremely pampered may find it hard to understand concepts of budgeting, saving and mindful spending as a teenager or young adult. And while it would be an exaggeration to say that such children would necessarily be imprudent with finances in adulthood, the process would definitely entail more hiccups with the possibility of financial loss.”

Vandana Sahani (name changed) believes that depending on the techniques adopted by parents in this regard, children can become financially savvy by the time they reach teenage. “I started familiarizing my children with money when they were 6 years old. I started involving them in simple household transactions and as they grew older, my husband and I would make it a point to ensure they participated in our conversations on taxes and investments. Now they are college-going students and can manage their own bank accounts and I am confident that should there be an emergency tomorrow, they are well-equipped to tide through it.”

Keeping them in the loop

According to Sahani, the fact that she and her husband routinely had conversations about money with their children played a crucial role in preparing the children to handle bigger financial matters pertaining to their own future. She says, “Since they have been money-wise form a tender age, my husband and I felt sanguine that it would be a good decision to make them privy to all the investments and savings that we made for them all these years for their future. For parents of children who are teenagers, it is important to start talking to them bit by bit about this because it is very encouraging for the child to see their parents trust them.”

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Your child’s future depends not just on the financial plans you have made for their security but also on how capable they are to create a strong financial bedrock for themselves as they leave the nest. Money lessons have to be a part of the syllabus until they start ‘adulting’.