The most obvious reason is if you do not teach money to your kids, nobody else will. So YOU must. And for all of us Children and Money both are very important. In fact the cost of having a child is so high that many people are wondering whether to have a kid and if yes can the afford the second kid!!

Here let us look at some more reasons:

1. Teaching them delayed gratification is one of the best things you can do for them! It will teach them patience, saving for a goal, thinking and re thinking about something before committing, …etc. This itself is immensely useful.

2. Good Financial Habits start early! -What you teach kids stays on with them till their grave. So when it is possible to mould their lives and thinking, putting in the nice seeds is very very important. Start early works here as much as it works for your money!

3. Kids influence YOUR financial decision making too! So teaching them Value for Money, Value vs Price, etc. may sound outlandish but is possible. All toys cost money – but that which gets used a lot acquires value!

4. They will learn to give AWAY – their own efforts, time, money, etc.

5. Kids can make their money grow when they understand compounding, equities, etc. So they tend to say…let me top up my Mutual fund – this is from a 9 YEAR OLD. Awesome early start, right?

6. Kids can learn budgeting and allocation of their own money. For e.g. I give my daughter a Rs. 5k budget for Diwali – she HAS to buy a dress – anything else is voluntary…So she has to make a choice of a hand me down I pad, an I pod, a hand me down Kindle, books, whatever. She skips crackers – which is FINE by me…..

sure there are more reasons..but this is a good beginning…

  1. Subra,

    Nice article.

    I wanted my kids to know the value of money.

    To teach them, I had kept Electricity Bill as my target area. I understood that through some prudent measures, we can reduce the bill by 15%. I had told them from the current bill, their target is to reduce 5% and any lesser bill, the difference will be theirs. I have also told them that bills can be reduced by switching off unnecessary lights,fans and geysers, reducing the opening of refrigerator, reducing the overflow of water tanks etc. Believe me, the reduction was more than what i expected and they now have a good pocket money to spend on right things.

    Second month I put a condition that any increase would be taken from their money. This brought them a sense of money saving attitude.

    There are other steps which I brought and are yielding good results.

    From “only 500 Rupees!!!” they have changed their statements to “500 Rupees ?”

  2. Hi Subra,
    Sometime back you were asking the readers what other topic we would like to see in your next book. Definitely this is one of the topic.

    But wondering how to teach delayed gratificatoin to a 5 year old when the kid is expecting toy/gadget the very next day?

  3. Hi Shankar,
    Typically delayed gratification can be taught to a 5 yr old, by showing him/her a small toy and a slightly bigger toy (can be the same price, but in their eyes, bigger is better. Tell them that if they want the toy today, they will get only the small one. If they can wait till next week then they get the bigger one. Initially they will opt for the smaller one and then insist on getting the bigger one too…but over time, they will learn to wait till they get the big one…

  4. I read a study recently which concludes that fast moving pictures on the cartoon channels on TV reduce the ability to delay gratification in small children. This could be a vital point in today’s world.

  5. 5 year old? take them shopping. Show them the money and tell them it can buy limited things. Ask them to work on a budget. It works. You may still buy something as a reward for learning…BUT DO NOT GIVE IT ON THAT DAY…

    and do not link giving / denying as a gain / pain event…completely disconnect..

  6. best way to teach delayed gratification – online shopping…
    they might then understand that they have to wait for the book/toy to reach their hands…
    next step is online wish list – they need to have something sitting on the list for a minimum days before it can be ordered…

  7. Hi Vandana,
    Thanks for your explanation on delay gratification, it sounds interesting and makes sense.

    Subra’s idea on introducing budget, help them understand financial values but not sure how the kid react … If they purchase full chocolates for that money then .. I don’t know what to do… 🙂

  8. After reading an earlier article (14-11-10) we started teaching our then 8 year old daughter the value of money. Today she has an FD of Rs 20k in India and is now after me to open a monthly SIP (inspired by One Idiot) for her to invest her pocket and reward money. Thank you Subra for all the good work being done through your blog

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