What Kids (11 to 13 Years) should know About Money

In continuation to previous posts What Kids (3 to 5 Years) should Know About Money & What Kids (6 to 10 Years) should Know About Money now move further ahead for kids whose age between 11 to 13 years. 

Kids (between 11 to 13 years old):

1. You should SAVE AT LEAST a RUPEE for every 20 - 50 Rs. 

Following activities are needful to reach this goal: 

• Encourage your child to always save 7-10% of the money he gets.
   
• Have your child set a goal to buy something he wants, and have him work toward that amount.
   
• To reinforce the savings habit, go to the bank two to three times a year with your child to deposit savings into his account, and look at how much bigger the balance is on each visit.
   
• Consider a "matching plan" for your child's savings: You put in 20 Rs. for every 100 Rs. he saves.
  When you are out for shopping, point out essentials such as food and clothing, and ask your child to describe items that she may want but are optional.

2. Entering PERSONAL FINANCIAL INFORMATION, like a bank or credit card number, online is risky because SOMEONE COULD STEAL IT.

Now a days most of the kids have access to internet, so little precautions are needed on this side as well. Following activities are useful:

• Discuss the dangers of entering personal information online.
   
• Explain that thieves can use Social Security numbers or other personal information to open credit cards or create fake documents.
   
• Explain that "free" offers online, such as cell phone ringtones or games, are scams to get people to spend money without realizing it.
   
• Make it a rule that your child never answers emails from someone he doesn't know and never clicks on pop-up ads.  

3. The sooner you save, the FASTER YOUR MONEY CAN GROW from COMPOUND INTEREST.

Following activities are beneficial:

• Compound interest is when you earn interest on both the money you save and the interest you earn.
   
• Show your child the following: If he sets aside Rs. 1000 every year starting at age 21, she/he'd have about Rs. 1,58,626.00 at age 55. However, if he begins saving at age 30 he'd have about Rs. 73,105.00 at age 55. Assume the account earns 8% every year.
• To compute compound interest, use the calculators at TheCalculatorSite.
   
• Discuss how much your child can save. What will he have to give up? Is it worth it? 

4. Using a CREDIT CARD IS LIKE TAKING OUT A LOAN; if you don't pay your bill in full every month, you'll be charged interest and owe more than you originally spent.

Following activities are useful:

• Discuss why you should not use a credit card (Loan) to buy something that you can't afford to pay for with cash.
   
• Look at credit card offers online with your child, and compare the interest rates.
   
• Using the Credit Card Repayment Calculator at RupeeTimes, see how long it could take to repay a Rs 5,000 credit card debt by making the minimum monthly payments.
   
• Discuss how a credit card can be useful for making purchases online, or as a convenience.