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How to teach good money habits to kids

Managing the allowance will teach your kids to make choices, prioritise and save for things they really want. This way they will learn that money is limited.

Updated: Jun 10, 2019, 10.49 AM IST
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Instead of advising, parents should allow the child to manage his own money.
Abha is the mother of 12-yearold Ayaan and has been having a difficult time managing his demands for things. Ayaan wants the latest electronic gadgets, money to spend in school every day, and to be out with friends over weekends. He is an intelligent and caring boy, but dislikes discussion about money. What she wants is for him to imbibe the right values about money and spending. Abha wonders if she is too late to teach good money habits to her son and what she can do about it.

Abha should create opportunities that force her son to deal with money. Ayaan is at an age where he will learn best from his own experiences, not through advice or discussions. The first step to inculcate responsibility about money is to provide him with a monthly allowance so that he can manage his expenses. Both mother and son must agree to the allowance amount and the new system. Abha must be firm about what she considers an appropriate allowance, not allowing herself to be intimidated by Ayaan’s tactics to increase the amount. They should also agree on the expenses that Ayaan will be expected to meet from this allowance. It will be a good idea for Abha to initially pay the allowance in weekly instalments so that Ayaan starts by handling smaller amounts in shorter periods, rather than making a large amount last for the entire month.

Managing the allowance will teach Ayaan to make choices, prioritise and save for things he really wants. He will learn that money is limited. It is very likely that he will end up spending all the money at the start of the week. Abha should be supportive and encouraging, but refuse to give him additional money or advance. Soon Ayaan will figure out how to make the money last. Abha must be quick to praise his small victories in managing money. As he becomes more responsible, she can allow him to make bigger money decisions. It will act as a positive reinforcement for good actions and instill money values and skills that she wants in her son.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of

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