Why discussing finances and estate with your kids is important

Children learn life skills mainly from their parents, teachers, and friends. As schools and colleges do not teach the management of personal finances at a practical level, nor are friends in a position to learn from each other, the onus of informing kids about finances falls on parents.

What you should discuss
It will help your children if you talk about saving, budgeting, and several other financial instruments with them. Besides, giving them a small amount to save and manage will help develop the habit and learn the nuances.

Nishith Baldevdas, founder, Shree Financial, Sebi-registered investment adviser, Chennai, said if we start teaching money management skills at a younger age, financial failures are significantly less. Also, if we begin involving kids in our day-to-day financial conversation (especially during budgeting and spending), they start learning about it in a better manner. This exercise helps them prioritize their requirements and allows them to understand the difference between ‘need’ and ‘want’. Also, they feel more accountable and responsible while dealing with money.

"The biggest benefit of this exercise would conclude that money does not grow on a tree and nothing comes for free in life. To grow, we need to manage it properly," added Baldevdas.

When you should discuss
Vikas Singhania, CEO, TradeSmart, said it is crucial for the child to know about the current scenario for them to help improve the situation. Parents will be pleasantly surprised at how soon kids pick up these points. In the current uncertain scenario, it becomes essential that children know about managing their finances and wealth. "Dinner table talks and family outings are good occasions to talk about the nuances of finance and real estate," Singhania said.

Why discuss estate with kids?
You may have to transfer your wealth to your children in a couple of decades. It's best to teach them how to handle it at a young age.

Parents can introduce kids to their financial adviser, who will teach them the value of money.

Discussing finances and estate with kids ensures your wealth reaches your children when they become adults.

“Talking to your children about money can make them less fearful and more efficient in money management. It can be an early leap towards financial security and independence," said Prateek Mehta, co-founder and chief business officer, Scripbox. “Also, when it is time for them to make major life decisions—a car, a property or education—they would be well prepared to manage their expenses, debt and savings."

Mehta added, "Understanding money and its value at an early age will help them in their adulthood. It will also make them comfortable in seeking professional financial help that they may need along the way."

Archit Gupta, founder and chief executive officer, Clear, said, "You must discuss finances and estate with your children to teach them the value of money. It sows the seeds of financial literacy at a young age and encourages your kids to learn more about managing money. Moreover, holding wealth is as important as creating wealth. Teaching your children the value of money at a young age makes sure your wealth is in good hands."