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4 reasons why your child should be financially educated

Updated: 14 Oct 2022, 03:18 PM IST

Inculcating habits into a child is easier than adults. Starting early always has a compounding impact as when you start investing in your child’s knowledge, you will get a wealthy impact. In this article, we will understand why a child should be financially educated.

4 reasons why your child should be financially educated

4 reasons why your child should be financially educated

Financial literacy is unquestionably important to learn about, yet it receives little attention in the educational system. Only 27% of Indians, according to a SEBI survey, are financially literate. When referring to teenagers, this figure drops to 17%. 

Though youth in India are becoming increasingly literate financially through media and technology, there is still room for innovation in educating teenagers about finance. The return on investment from financial education is lifelong. In this blog, we will outline the four good reasons to teach your kids about money.

Start early, Stay ahead

At first glance, it might seem pointless to teach kids about money because they aren't going to need it now. The sooner they learn about it, the easier it will be for kids to understand and make decisions on money. They will be more efficient at making financial decisions throughout their lives.

When they start to earn, they are habitual enough to spend, save, protect, and invest wisely. They will tend to spend more on assets rather than liabilities as they know the line beyond which they are not allowed to spend on their wants.

Develop the right mindset

We've all seen or experienced the consequences of poor financial decisions. We often spend money on things we don't need or purchase luxury items for the sake of societal pressures. These are not decisions that require calculation or knowledge of taxation laws. It required the right mindset.

When it comes to children, shaping their thought process is relatively simple. Early financial education not only provides children with technical knowledge, but also fundamentally changes their thinking about money. It becomes much easier as an adult to inculcate the right monetary mindset into the children when it becomes their attitude.

Learn to leverage money

The first rule of wealth building is to make money work for you. In technical terms, investing in assets that generate passive income. The traditional education system emphasizes getting a job, saving, and retiring. That is the reason why most people spend their lives working for money and never consider leveraging it to increase their wealth.

Teaching your child about the importance of having multiple sources of passive income will help them in reaching their financial objectives and creating wealth for their future generations as well.

Teaching the value of money

It is difficult to distinguish between what we need and what we want and, consequently, we end up spending more than our budget. The accumulation of wealth is replaced by the collection of debt. It is, therefore, crucial to teach your kids how important money is and to learn to value it. Financial education enables this by instilling in them the importance of saving and spending wisely.

Habits take a long time to form. It is therefore important to start teaching your kids about money at an early age. As they progress in their lives, they will be able to earn more, save more, spend more, and invest and make more. You must put in time and effort, but the rewards will be worth it.

Anushka Trivedi is a freelance financial content writer. She can be reached at

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First Published: 14 Oct 2022, 03:18 PM IST