In a world where pocket money is going digital, a 12-year-old can buy AirPods with a UPI scan, and spending peer pressure kicks in by Class 5, financial literacy can’t wait until adulthood.

Yet most Indian parents still think the first money lesson should be about saving. What if we’ve got that backwards?

“We never focus on training children to spend wisely. But spending is a very integral part of financial management,” says Harshvardhan Roongta, certified financial planner at Roongta Securities. “Unless you’ve spent wisely, there is no money left. So first, let kids just be smart spenders.”

Why Spending Lessons Must Come First

A child who doesn’t understand how to spend will never truly learn how to save. It’s like asking someone to drive without ever explaining brakes and turns. “Even schools introduce alphabets before words — similarly, financial literacy has to be a process,” says Roongta.

According to the 2024 HDFC Life ‘Young India & Money’ survey, 63% of parents said they ‘regularly speak to their children about saving’, but only 19% involve them in real spending decisions. That’s a major gap in applied learning.

Instead of shaming children for ‘wasting’ money, the focus needs to shift to understanding value, choices and consequences. Because, as every adult knows, you only really start valuing Rs 500 after you’ve blown it once.

Let The Popcorn Be Bought

“There’s no better teacher than experience,” says Roongta. “Let the child go and buy their own popcorn. Even if they lose Rs 500, it’s a small price to pay for the immense learning in that exercise.”

“We get so paranoid with the outcome that we forget the stakes involved are too small,” he adds.

A 2025 study by MoneyforKids India, which tracks behavioural trends in children with access to real money, showed that kids who were allowed to make at least one ‘regrettable’ purchase showed 35% better budgeting awareness within six months compared to those whose expenses were monitored or restricted.

Peer Pressure, Instant Gratification

The toughest part isn’t handing over the money. It’s watching your child navigate the social pressure to spend like their friends.

“You can’t tell a kid to reject instant gratification and then send them back to a friend circle where everyone’s spending on the latest phone. That’s confusing,” says Roongta.

The 2024 Kids & Cash Report by Kantar India reveals that six in 10 urban children aged 10 to 14 said they felt “pressured to match their friends’ spending” especially on fashion, electronics and food delivery.

“We want kids to learn delayed gratification, but let’s be honest, even we fall prey to impulse purchases. Often, it becomes about buying everything we were denied as children,” Roongta admits.

That doesn’t mean throwing your values out the window. “Within your standard of living, there is enough that you can give your child for them to understand gratification and spending,” he adds.

Why RBI’s Proposal Deserves Closer Look

In April, the Reserve Bank of India proposed allowing children aged 10 and above to operate their own bank accounts independently, with safeguards in place. While this sparked concern among some parents, Roongta believes it could be a great opportunity.

“For parents who would want to introduce money management to their kids, it’ll be a good move. And if RBI has thought about it, I’m sure there must be some logic that has gone behind it,” he says.

The thought is also backed by data. A 2024 pilot project by the National Centre for Financial Education in collaboration with PSU banks found that children aged 10–14 who used limited-access savings accounts were 42% more consistent with tracking their spending and 21% more inclined to budget than those without account access.

“Why not have an option for children who want to independently use their bank account, given the framework of risk management that they have in mind?” Roongta adds.

But you don’t need to wait for a policy shift to start teaching your child about money. Roongta suggests starting with small changes in how money is viewed. Give them cash for specific purchases, let them make a ‘bad’ choice and then reflect on it with them. Maybe talk about your own money mistakes (yes, that UPI over-order too), and ask “what will you trade off?” rather than saying “no”.

It’s important to be realistic, and remember that the kid will grow up to choose between wants, needs and priorities. And the earlier they understand the real cost of a decision, the more grounded their money choices will be.

Because your child’s first financial mistake, be it that overpriced snack, or that barely used toy, may just be the best investment they’ll ever make.

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