Empowering students to handle money matters

Many students view money simply as a means to buy things they need, like school supplies, snacks, mobile recharge or gifts for friends’ birthdays. If parents and teachers do not instil proper knowledge at a young age about earning, saving, rent, interests, taxes and living within your means, kids may find it difficult to fathom why they’re facing money problems later in life.

Financial literacy from a young age is necessary to develop confidence in handling money matters, discipline to plan the use of available money, and skills to earn more and stay afloat within resources.

Educating kids about money

Managing pocket money: We all started with those small coins as pocket money and graduated to larger sums as we entered school and college. This pocket money can also serve as a big lesson in financial literacy.  

a. Encourage kids to track spending by noting all expenses to the last coin. Teach them how to tally all spending weekly and monthly. 

b. Show them how to allocate amounts for bare essentials like school supplies, personal wants like ice creams and snacks, and how to save for the next month. 

c. Lead by example to avoid impulse purchases (like toys, ice creams) and one-time splurges on gifts or treats. Sleeping over an urge generally reduces its urgency. 

Set a budget: The word may initially sound intimidating, but it can impart valuable lessons in financial planning and wise spending. Set aside a few minutes every month with your kids to set monthly goals. Understand major and minor expenses anticipated that month and set aside an amount. When there are major expenses, some smaller, less important ones can be foregone for that month. It also helps learn to prioritise spending within the means, avoiding credit later in life. 

Create a monthly planner with all the expense heads. Write down income in one column and expenses in the other, and track how much you budgeted for each segment and how much you spent and saved. This gives you your monthly money habits at a glance.

Savings and earnings: Often, pocket money is insufficient, especially in college, when spending on friends increases. At these times, parents must teach kids about saving and earning. Saving is a big part of the Indian Household economy and is helpful in many emergencies. Kids can save money once in a while without spending on unwanted things. They can also earn through small activities like babysitting, car washing, helping with chores, tuition to younger kids, designing e-cards for friends and relatives, interning at stores during holidays, and many other modes that also help learn the dignity of labour. 

Student savings account: Many banks offer accounts specifically designed for students with zero-balance options. Even small amounts can be deposited; passbooks and chequebooks need parents’ signatures. Traditional piggy banks or apps like Paytm and Google Pay can make saving fun and accessible. Challenging and rewarding kids to save a fixed amount for a month or a year leads to larger amounts in the kitty and gives them a sense of delayed gratification. 

Books as mentors: Encourage students to read books like ‘Rich Dad Poor Dad’ by Robert Kiyosaki or The Richest Man in Babylon by George S Clason that impart lessons in the value of money. Biographies of people who made it big from humble backgrounds, like Dr. Abdul Kalam, Narayan Murty, and Oprah Winfrey, also tell about how money is earned through sheer hard work. 

Many parents either pamper their kids with money as and when asked or prefer to narrate their childhood hardships to their children to deter them from spending too much.

This could backfire in a way that children develop a strained relationship with money. Rather, letting them understand that money, if managed well and earned enough through education and skills, can enable one to accomplish many things in life, including enjoying it and giving it to those who need it.