Psychologists say most part of our brain forms between the age of three and five, our habits and behavioral patterns are formed in our teenage years. Therefore, what we learn in our early life, we apply in our later stage. 

The rate of financial literacy, as per several studies, is surprisingly low across the board. The tendency of spending on luxury, the pattern of buying everything on debt or being financially unprepared for retirement are few bad habits that happen to us due to lack of healthy financial habits, something which we are not encouraged to imbibe in our early years.

What we teach our children and how we educate them at this stage is very important. And like every other subject – for example history, maths and language, financial literacy should also be added to the curriculum.

As per financial advisors, Indian parents have a tendency to keep their children away from the troubles or the hard times they are going through. That is the first thing they should stop doing.

Home and parents – are the best learning platform for children. So, they should be allowed to be present at the discussion table even if they are unable to participate. They should be aware that they are going through hard times and hence, they should also be acting in certain ways, co-operating with their parents. 

Moreover, children tend to pick up their parents habits. Hence, we should be wary about what kind of things we are performing in front of them. This includes financial practices too.

For example, if you are out for shopping with your kid(s), you should be conscious about spending money. Make a list of things you need to buy, choose the right product, make sure to check the product cost and also bargain if possible. Ensure that your kids understand that even a mundane task like vegetable or grocery shopping needs certain planning. 

Parents should teach their children how to manage money from very early age. Like if they want a specific toy – instead of buying it for them, encourage them to save towards it. It’s important to make them aware of the fact that one has to work hard in order to earn money.

At the same time, they should be allowed to indulge at times. The purpose of money is not always to save.  Use it, indulge but always be aware of how much you can afford.

The past generations had immensely encouraged their children to save their money in piggy banks. This has given rise to a generation of savers but not investors, who are extremely risk averse. They continue to practice similar habits in their adulthood too while dealing with real money. Hence, their money doesn’t grow.

At a time when returns from fixed assets and real estate don’t beat inflation, such teaching would harm an individual more than being benefiting. Children should be allowed and encouraged to take risks. This would directly benefit their finances better. 

Schools also should play their part to make children financially aware.  Like in the junior classes, they should introduce the basic concept like money, bank accounts, savings etc. As they grow up concepts like retirement, insurance and inflation should get added to the syllabus.  

At schools or at home, children should be encouraged and taught to have a healthy relationship with money. Such teachings go a long way as kids learn good financial habits and to avoid financial waste.