This is a series. In this series, I speak to you about an important subject—how to cultivate saving habits in children and how the money they receive can be strategically increased and utilized. Here you will find different approaches that parents should adopt at various stages of a child’s age.
A sad reality is that none of our children’s academic lessons include this extremely crucial truth in any syllabus.
This series is written specifically to teach saving habits, wealth creation, and investment lessons to children of different age groups: from 5 to 12 years, from 12 to 17 years, from 17 to 22 years, and above 22 years.
Have you noticed the children of certain individuals who manage the entire financial accounts of large corporations? While their parents carefully monitor every detail of the company’s finances, these children often behave like people who know nothing about saving or managing money. Why does this happen?
Let us understand it through an example. It is the result of not knowing the basic principle that if a single grain of paddy (rice seed) is planted, it will later produce many more grains. The root cause behind this is the misguided belief among many parents that their children are not yet capable of handling money. This assumption should not be accepted, or it may lead to regret later.
Teaching children about earning money, protecting it, and learning how to multiply it should not begin only when they reach youth; it must begin in early childhood itself. Remember the truth that no one applies fertilizer to a paddy grain; rather, fertilizer must be applied at the base of the rice plant. The same principle applies to children.
Here begins the first part of this series, dedicated to parents and teachers who possess practical wisdom. If necessary, it can be implemented; otherwise, it can be ignored. That choice is left entirely to each person’s understanding and mindset.
Age: 5 to 12 Years
This is the best time to teach children the habit of saving. It is the primary school stage. What begins here will later serve as the foundation throughout life for financial awareness, saving habits, investment methods, and many other positive practices. At this age, children should not be taught investing; instead, they should first learn the habit of saving—especially the basic lessons of how money can be earned.
Little-known or often-forgotten truths about saving
Some parents buy a piggy bank for their children. Occasionally, they give a few coins and ask the child to drop them into the piggy bank—only when they feel like it. That is the end of it. What benefit does this brings?
Children do what their parents say and then forget about it. Meanwhile, parents proudly tell everyone that their children have a piggy bank and they are teaching them how to save money. The author has rarely seen such foolishness in life. More will be explained below.
Let me tell a story:
Once, a father called his school-going son and gave him a coin, asking him to throw it into a nearby well. The boy obeyed. On many days afterward, the father gave him coins and asked him to throw them into the well, and the boy did so.
One day the father said to him, “There are some small tasks you can do at home today. If you complete them, I will give you a coin.”
The boy agreed.
After finishing the tasks, the son returned, and as promised, the father gave him a coin. Then he said, “Take this and throw it into the well.”
Hearing this, the boy looked angrily at his father and said, “No, that won’t happen. I earned this through hard work. It is not meant to be thrown into a well. This is belongs to me.”
Do you understand the essence of these two situations? It is simple—things received without efforts have no value. Things earned through hard work carry true value. It also conveys a powerful message: money should be spent only with care. Isn’t that right?
Now the question arises: how can children be taught to earn money and understand its value in this way? That is the core of this article. Here are some ideas. Parents may modify them according to their own thinking, but the child’s age must always be taken into account. Otherwise, what is done may backfire and become as pointless as making a dragonfly to lift a stone. Therefore, caution is necessary.
1. Avoid the habit of giving pocket money
The first thing parents to do is to avoid the dangerous habit called pocket money. It should never be given. Some parents see it as a symbol of status, but that is completely wrong.
Giving pocket money may create the dangerous thought in a child’s mind that their parents will give them money every month or every week without effort. It may also create the belief that they will receive money whenever they ask for it. Such thinking can quickly make them lazy.
Moreover, since the money is received without effort, children will not understand its value. They will spend it carelessly. In my view, this habit among parents is extremely dangerous.
2. Encourage children to earn on their own
There are many good ways to do this. For example, children can be encouraged to perform small tasks appropriate for their age: neatly making their bed in the morning, maintaining good morning routines, helping with household chores, assisting in the garden or farm, and similar activities.
After completing such tasks within a certain period, a small amount of money can be given as a reward and encouraged to be deposited in their piggy bank. They will then value that money.
3. Emphasize personality development
Parents can buy books appropriate for the child’s age and ask them to read them during holidays or free time. Later, parents can ask a few questions to understand whether the child truly read and understood the book.
If it appears they did not read it carefully, the reward should remain only as encouragement rather than a full prize.
The books given should be those that children enjoy reading at that age. Parents may even ask them about their preferences.
Books containing good moral lessons are the best. Children of this age enjoy reading or listening to stories. After completing each book, a small reward can be given. This will not only cultivate the habit of reading, but also guide them into the vast world of knowledge.
4. Encourage focus on studies
This is a method the author personally applied successfully in life.
For most parents, their children’s education is the highest priority. When children do not study according to expectations, it causes parents great distress.
A simple idea can be implemented here. Rewards can be promised according to the marks children score in exams. For example, if they score above 80% in all subjects, a certain reward can be given.
Similarly, charts can be created for 85%, 90%, 95%, and so on, and displayed in the child’s room.
If they fail or score poorly in any subject, a certain amount can be deducted from their reward. However, it is extremely important that children clearly understand these rules beforehand.
Further ideas and strategies in this area are left to parents themselves, because the financial condition of each family plays an important role in deciding what kind of rewards can be given.
If there are any doubts about this topic, they may be shared as comments, and I will try to help as much as possible.
5. Encourage artistic talents through rewards
Every child possesses natural talents. Some may have a talent for drawing, some for singing, some for writing, and others for different artistic abilities. It is the responsibility of parents to identify and encourage these talents.
Have you noticed some children drawing or writing on walls? Often parents scold them for this. The author himself once did the same with his children.
But what if this is the beginning of a hidden talent? What if it is the start of something extraordinary that could one day transform their entire life?
Therefore, every action of a child may carry its own meaning and significance. These talents should be encouraged through rewards. Remember, what greater pride can there be than seeing your child excel?
Schools often conduct various competitions—artistic and otherwise. These can also become opportunities. If children win prizes, they can be shown that their savings will grow accordingly by rewards from parents. This helps them understand the connection between effort and reward.
6. Emphasize spiritual values
Every person’s life has four dimensions, personal, professional, social, and spiritual. All of these tightly connected to each other.
Children should be encouraged to value a life of faith. According to each family’s beliefs, small ideas can be created to inspire them in this direction. Here also the reward matters.
7. Social awareness
This is extremely important in a child’s life. Children can be encouraged toward personal development and social participation through rewards.
For example, their involvement in annual gatherings and community events can be appreciated and rewarded.
Character formation is equally important. If children make mistakes, they must understand that they themselves will face consequences. For example, children must understand disobedience toward parents, siblings, classmates, or teachers cause.
If children understand that such behavior may cause them to lose rewards or privileges, they may correct themselves.
A word to parents
The ideas mentioned above are merely suggestions. They can be adapted creatively according to each parent’s circumstances. Since the topic concerns children’s saving habits and how those savings can grow, a few important points must also be remembered.
- Occasionally, fathers can borrow small amounts of money from their children and return it later with a little extra. This will teach children how money can grow.
- Similarly, mothers can borrow money occasionally but delay returning it. When children ask, give various reasons and postpone repayment. Later return only the original amount—or sometimes do not return it at all. This helps children understand whom they should lend money to and whom they should not.
- When speaking to children or making promises, be very careful. If you promise something, it must be fulfilled. Otherwise, the result may become negative.
- Do not immediately provide everything children ask for. Remember that practical wisdom must be given priority over emotion. For example, a book required for studies should be given immediately, but toys can be delayed. This teaches children the difference between need and want.
- When children request something, encourage them to purchase it using their own savings—but ensure it does not exceed 25% of their total savings. This will teach them to think carefully before buying anything and to live within their means.
The next part of the series will discuss children between the ages of 12 and 17 years.
Since this is the first article in the series, you may subscribe if you wish to receive the upcoming articles time to time.
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