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A few years back US Trust surveyed High Net worth Individuals, which reveals that 78% HNIs say, the next generation is not financially responsible enough to handle inheritance. How far their concern is important?

Williams Group wealth consultancy reports, about 70% of wealthy families lose their wealth by the second generation, and 90% by the third generation.

The reason may be on a combination of lack of financial knowledge, financial irresponsibility, bad decisions, bad luck, and alcohol dependency, most of them have no clue as to the value of money or how to handle it, and the next generation has blown- away that estate.

Then think of the financial future of our kids. It’s not important how much money we are saving for our kids. Life revolves around money. Importing knowledge of personal finance is a life lesson. By doing so, you are pushing your family wealth to another half-century.

Teaching kids about money are straightforward. It is not just about giving textbook lessons. Practical education makes kids capable of interpreting things which can change their financial world for good!! Remember that children learn a lot watching their parents. Be careful to set a good example – and don’t be afraid to admit if you don’t know how to do it.

Engage your child in day-to-day activities like trips to the bank, ATM, shopping which turn into a perfect opening for a money discussion. Kids can experience and learn the power of comparison, bargain, the impact of brands, money values, consumer behaviour, evaluating the so-called offers and life perspective and so on.

The habit of Saving -

Give your kid a piggy bank or bank account to save regularly. Explain the importance of saving for rainy days and future goals. Monitor how much they saved from the allowances and gift money.

Allowance and Gift Choices:

When your child understands we need money to buy things, give them a small weekly allowance. Encourage them to use for their personal spending needs and wants. Let them make their own spending choices. Encourage them to think, Do I need it now or can you have it later?. You can gift some amount if they are not making impulsive purchases and practice the delayed gratification. Periodically give them a choice of gifts with equivalent money. Ask them to plan purchases. Raise the allowances each birthday reasonably.

Responsibility and Mistakes:

The Grown-up child can be encouraged to take care of doing formalities, payments, monitoring and review. Engage them in financial discussion and decisions. Its okay and better for your child to make small mistakes now than more significant mistakes later in life.

Tune them to be a Wise consumer:

Ask your kid about the need of a spent. Help them with choices and alternatives. Take them to multiple shopping verticals to compare price, quality, the scope of bargain and sales, marketing gimmicks deployed. Make them understand costly doesn’t mean quality and vice versa. Discuss with them how advertisements persuade people to buy products and not fall prey to commercials.

Discuss Financial Frauds and Scams:

You have plenty of current financial frauds and Scams. Give them assignments to read and elaborate how it happened and how even educated people got trapped. They can be asked to identify potential frauds and scams. This one exercise will be sufficient to sharpen your kids’ financial awareness.

Teach the basics of Personal Finance Teach your child about Difference between Need and Wants, the power of Compounding, Inflation, Interest rate, Rate of return, Asset, Liability, Debt, tax impact, the concept of Insurance, risks. You can use personal financial games to stimulate possible real-world surprises and shocks and see how their decisions may impact their financial future.

Take them to Places:

Give them enough chance to spent time in a rural area. It could be a visit to your parents’ home, relatives’ home. Use different mode of transport. Don’t always pamper them. They will understand lifestyle differences and what it takes to maintain. Take them to Orphanages, an old-age home, Govt. schools, hospitals and slums. Encourage your child to spend money on helping the needy.

Family Finances:

Involve your child in family financial planning, be it budgeting, setting financial goals, making payments, careful shopping, planning significant expenses and vacations. Let them know affordable choices, alternatives and let them have a say in family’s decision-making process.