From a very early age right through their teenage years, we teach our children both hard and soft skills such as language, math and grammar. But when was the last time you used a quadratic equation to explain a monetary issue to your child? When was the last time you involved your child while planning for taxes, using your credit card or making a banking transaction?

Research has also indicated that children who were taught about money from a young age ended up being more decisive about their monetary decisions later in life.

If you want your child to grow up smart about money issues, we recommend you ask yourself the following questions and take action accordingly:

• What is your child’s attitude towards money?

• What message is your child getting about the reality of money (for example, is it a bottomless pit, does it grow on trees, “parents are my ATM", among others)?

• What are your family’s financial values—do your children understand them?

• Do you take time out to talk to children about money matters?

• Do you and your spouse agree on how to raise your children financially, or do you have arguments over this?

• Are your children “set for life" because you happen to be very rich? Do you know how to instil financial discipline in your children?

• Do your children know how to make money and keep it? Do they know how to make investments and how to make their money grow?

• Do you know who your children’s role models are, and what influence they have on their perception about money?

• What financial habits do you want to pass on to your children? Does the affection of the grandparents dilute the discipline you have instilled in the children?

• What have you taught your children to start them on a journey of financial literacy that will last a lifetime?

Once you have done some introspection and dealt with these questions, sit down and figure out how and when you will talk to your children about personal finance. Don’t do this in a casual way, while, say, watching television. Set aside a special time when they are free from school or homework.

Teach them five basic financial skills

• How to operate a bank account—depositing money, using cheques

• Distinction between consumption and saving—how they use their pocket money

• How to spend wisely and stay within budget—discuss choices regarding the best use of money and prioritization of expenses

• What credit is—liability that has to be paid back

• Value of investing—compounding of capital to increase wealth.

Not all of these are relevant for, say, a three-year-old, but there are ways in which a parent can contextualize these lessons for children independent of their age. For instance, for a child in nursery, you could start with talking about putting savings in a piggy bank. But for teens familiar with the math of compounding, you could open a bank account and have them see how interest is earned and how a small account can grow into something big by the time they finish school.

Remember, in today’s competitive world, it can be very tough on your children if they end up learning basic personal finance skills the hard way—once they have grown up.

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