Don’t You Give Pocket Money to Your Children? Read Here to Know Why You Should Give


Most people in India do not invest their wealth, rather they keep it in the bank or in cash. This is because investment habits are not inculcated from the childhood. With the help of this article we urge the parents to start giving their teenage kids some pocket money and also teach them how to spend it wisely and invest what they save.

Parents’ concerns about giving pocket money to their teenage kids:

  • Concern: Kids might lose the money.Counter: let them lose it once or twice, when it happens with them they will start handling money more carefully.
  • Concern:  They may develop bad habits out of curiosity like cigarette etc.Counter: With India moving towards a cashless economy almost all payments can be made online. Now days bank accounts can be opened for kids too. Pocket money shall be given through bank and debit card should be with the child to make payments. This way parents can keep a track of  how the money has been spent. Parents can instruct the bank to block ATM cash withdrawal. Any cash expense can be met by parents separately.
  • Concern: What is the need of pocket money if parents pay as and when required?Counter: Making your kids accountable for their money is going to give them great confidence and a lot of learning. This benefit alone will supersede any other concern.

How the child can learn the art of investment?Why you should save pocket money

Nobody thinks of saving or investing when one is too happy to spend.

But Warren Buffet purchased his first stock when he was only 11 years old! Starting early is the key!

Believe me, starting as early as possible to invest with as little an amount, can do wonders for all you students getting pocket money, in the future. With a judicious pocket money of Rs.5000-6000 per month in metros, all you students can at least try to save Rs. 1000 per month. If you mange to do so, you would have saved Rs. 12000 by the end of one year. Over a period of 5 years it would be a fancy Rs. 60,000, enough to buy your dream bike/scooty. There is a difference between saving and investing. Investing will grow your money, so you can start investing with as little as Rs. 500 per month. Some of the ways in which you can invest your money are:

  • Savings Account:  Depositing small chunks of money every month at an interest rate of 3-5% will help your money grow over a period of time. This is the simplest way in which you can grow your money.
  • Fixed Deposits:  The minimum amount that you can invest in an FD varies from Rs.100 to Rs.1000. By investing in a bank FD you can earn an interest of 7%.
  • Mutual Funds:  You can start investing in mutual funds with even Rs. 500. The Equity based MFs can earn you an annual return of as high as 20%.
  • Share Market:  You just need to open a Demat Account with a broker (offline or online) and you can start trading right away. This is the right stage to enter the share market with lower stakes and a higher ability to take risk.
In addition to the monetary benefits, there are other benefits of starting to invest your savings early in life:
  • Financial Management:  If you learn how to manage your money before you actually start earning, you would be equipped much better skills to manage your finances.
  • Financial Discipline:  All of us have the urge to spend our money, but if you start investing early, you will learn the art of saving first and then spending.
  • Financial Independence: At this age, you are better able to save and invest your money as you do not have financial liabilities or responsibilities. You can just focus on learning the art of investing your money smartly.
The crux is that, all the parents should start giving their children some pocket money, so that the children can learn the tricks of the trade of investing at a very early stage and reap the benefits later.
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Akanksha Goel | LinkedIn