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Teaching children fiscal prudence

Does money matter? Yes, it does- it may not be an end in itself, but is a means to an end; it is a mere tool to some, but a resource to others. How we deal with the money given to us (and made by us) is a very important aspect of our lives. And how we teach our children to deal with money is a very important aspect of our role as parents. Most of our children are not fiscally prudent- the fault lies with us. We have to begin teaching them fiscal prudence when they are young: no age is too young to start. Fiscal prudence came to most of us naturally- we saw our parents live frugally; profligacy was never a way of life with us and we learnt to be careful with money even before we started earning. Somehow, along the way, we forgot to teach our children fiscal prudence. Money became a taboo topic and our children think it is embarrassing to talk about it (as long as all their needs and wants are met). But it shouldn’t be a taboo topic. Teaching our children about money– how to manage it, save it, and spend it wisely—is a valuable gift that we can give them.

How nice it would be if we could introduce the concept of money to our children early. As soon as they can count, we can start teaching them basics. We can tell them how we deal with money in our household. We can tell them how much we save, how much we spend and how much we give so that they get an idea about the three ways in which money can be used: the ideal would be to spend a third, save a third and give away a third, but we can have our own formula. It could be 60, 20, 20 or 80, 10, 10, but it is important to teach them about giving at a young age- giving to worthy causes, giving to the less fortunate and so on. We should also teach them the difference between spending on necessities and spending on luxuries.

Nicole Weisman, a mother of two in Los Angeles, California, teaches her four year-old important lessons whenever they go into a store. “I tell her before we go into a store whether it’s a ‘buying day’ or a ‘looking day.’ Most of the time it’s a looking day, and we talk about what we would like to buy someday if we save our money. Then, about once a month, we go for a ‘buying day’ and she gets to bring her own money and pick out something special.” These looking days are indeed special- it teaches kids that they don’t necessarily have to “own” everything they want.


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Renuka Vaidyanathan, an erstwhile finance professional, opted out of the corporate rat race and now likes to think that she wears many interesting hats. She is an events’ organiser in the cultural space and also writes every now and then about people, places and events. She is an avid advocate of 'green living' and dabbles in some sitar-playing as well, albeit as an amateur.

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One thought on “Teaching children fiscal prudence

  1. Kritika Srinivasan

    Excellent article Renuka. When analysed this way, it seems easy doesn’t it? To save, spend or give away. I would do well to organise my finances in this manner as well! Thanks for this.


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