Schools don't teach this

17 years

This is the minimum time spent by most of us getting a formal education.

2 years of Kindergarten
10 years of School (Primary and Secondary)
2 years of junior college (11th and 12th)
3 years of Degree College

Am not even taking into account the years invested in education by engineers, lawyers, doctors, PHDs and even those who do any sort of post graduation.

The vast majority of those who invest so many years in education do it at great cost. Both in monetary and non monetary terms. Being saddled with loans the priority is to secure a job which pays a handsome amount so that the loan emi is completely covered rather than looking for a role which offers learning and fulfillment.

This problem is not faced only by Indian schools but world over. Schools in the US are struggling with education children on basic financial lessons such as even opening a bank account.

In India, there are multiple reasons why children turn out to be financially illiterate adults. Some of them are:

a) Parents themselves are unaware about basic investing and insurance concepts
b) They trust what their parents did historically. For example: Fixed deposits being a safe investment destination. However they do not take into account that fixed deposit rates have been falling and inflation will end up pummeling whatever little returns a fixed deposit will offer. And I am not even counting the impact of TDS.
c) It is taboo for a child to discuss financial matters with parents, except, in certain communities. 
d) Taking up part time jobs are still frowned upon

Some of you may feel this doesn't make sense. How can little children be financially literate?

Let us look at what happens in the United Kingdom:

An organization called Personal Financial Education Group (Pfeg) organizes My Money Week.

This is what it does:

Pfeg has reached more than 2.5 million students since 2008. These students have shown a marked improvement in both financial knowledge and skills. Fashion shows, Youth Parliaments, Dramas, Debates and community economy projects have been used to educate young people.

However all is not lost for Indian students.

Interestingly in 2012, RBI came up with a draft to improve financial literacy in Indian schools: https://goo.gl/JyV7gY The list of topics covered seemed quite exhaustive and one can go through the draft in detail. Raghuram Rajan also spoke about spreading financial literacy in 2016.
Indian schools will take a few more years to warm up to the concept of spreading financial literacy and the initial baby steps will not teach children about the long term benefits of investing.

In the interim it would be great if atleast those parents who are aware about the long term value of investing encourage their children to understand the benefits of investing. A demat account can be opened in the name of a minor by its natural guardian provided the latter is atleast 18 years old.

Let us assume you create a demat account for your child by the time she is three and begin investing Rs 500 per month. By the time she is 12, she could invest this amount as children of most people reading this article would be getting a lot more than Rs 500 as pocket money by the time they are 12.

When the child is 20, she could earn:

At a CAGR of 15%, one can earn a corpus of Rs 4.7 lakhs
At a CAGR of 20%, one can earn a corpus of Rs 8.5 lakhs

At a CAGR of 25%, one can earn a corpus of Rs 16.19 lakhs

According to this article, Birla Sun Life Equity Fund has offered close to 20% returns over 15 years.

Imagine completing formal education with a corpus of Rs 16 lakhs. Not bad eh?

The standard disclaimer: Mutual funds are subject to market risk. Please read the offer document before investing

The important disclaimer: You are inviting inflation to destroy you if you dont invest in equity for the longer term.