On Children’s Day, celebrated annually on November 14 in India to honor the birth anniversary of Pandit Jawaharlal Nehru, experts highlight the importance of equipping young minds with financial literacy. This essential life skill not only supports informed financial decisions but also contributes to long-term stability and success.
Importance of Early Financial Education
Financial literacy from a young age lays the groundwork for responsible money management throughout life. Manoj Kumar MN, a Physics teacher at 90+ My Tuition App, points out that “76 percent of the Indian population is financially illiterate,” emphasizing the urgent need for early financial education. Kumar states that introducing basic concepts such as budgeting, saving, and investing helps build healthy financial habits and supports both individual stability and national economic growth.
Husien Dohadwalla, Co-CEO of Crimson Schools, stresses that financial education can bridge economic class divides and prepare students for secure futures. “Teaching financial literacy helps students develop responsible spending and saving habits, reducing the risk of future financial mismanagement,” says Dohadwalla.
Global and National Context
Sugandha Jain, Associate Technical Director at Athena Knowledge Center, underscores that India’s financial literacy rate, according to an S&P survey, is only 24 percent—one of the lowest globally. This lack of financial awareness often leads to poor decisions that can have lasting negative consequences for individuals and their families.
Practical Methods for Teaching Financial Literacy
Jain advocates for a practical approach to teaching children about money. A small allowance, for instance, can give children hands-on experience in making decisions about saving and spending. “If a child receives Rs 100 per week, they could be encouraged to save Rs 50 for something special while using the rest for small treats or toys,” Jain suggests.
Dohadwalla advises that parents can start teaching simple money concepts around the ages of 6 to 7. “Discussing everyday financial experiences and encouraging budgeting and saving can serve as a strong starting point,” he says. Children can begin by learning basic financial concepts such as:
- Identifying Coins and Bills: Recognizing different denominations and understanding their value.
- Simple Transactions: Participating in role-play scenarios involving buying and selling.
- Saving: Using a piggy bank to save for desired items, promoting the idea that every small effort counts.
Kumar adds that introducing more complex financial ideas as children grow older builds strong, lifelong financial habits. Bharathi Lakshmi, Principal of Hindustan International School, Chennai, shares that traditional methods like piggy banks can still be effective. “Tiny drops make a mighty ocean,” she notes, suggesting that rewarding children with small incentives for tasks can motivate savings habits.
Family Influence and Practice
Children often learn by observing and emulating their family’s behavior. “Listening to discussions on family savings can inspire financial literacy in kids,” says Lakshmi. Using saved money for meaningful activities, such as vacations or charitable donations, also reinforces positive financial habits. “Kids learn best with practice,” she adds.
Technology and Awareness
While financial literacy is crucial, parents should also be mindful of the potential pitfalls of technology. Anju Soni, Principal of Shiv Nadar School, Noida, warns about the risk of scams and fraud due to a lack of awareness. “Parents should ensure that financial education is age-appropriate and avoid overwhelming young minds with too much information,” Soni advises.
Financial Literacy in Schools
Experts agree that schools play a vital role in promoting financial literacy. Jain advocates for structured financial literacy classes to provide foundational knowledge for effective money management. “Incorporating financial education into the curriculum empowers students to make informed decisions that shape their futures,” she says. Initiatives like the Financial Education Training Programme (FETP) can train teachers to introduce these concepts in classrooms.
Sanamdeep Chadha, Education Reformist and Director of Genesis Global School, Noida, supports special classes that cover topics such as banking, investment, and economic principles, offering practical insights that students can use throughout life.
Dohadwalla points out that financial literacy is already part of the curriculum in some Indian schools. “CBSE schools offer financial literacy as a skill subject starting in Class 6, and students from Classes 9 to 12 can opt for the Financial Markets Management (FMM) course,” he says. This course educates students on money management, equity markets, mutual funds, and relevant tax laws.
Conclusion
This Children’s Day, it’s important to recognize that teaching financial literacy equips children with the tools needed for a stable and successful future. By adopting practical approaches at home and integrating structured lessons in schools, parents and educators can collectively foster responsible financial habits in the next generation.
