The most wonderful aspect of Parenting, for me, is that it gives an opportunity to both the parents and the kids to evolve. While the kids are growing up from a mushy bundle of happiness to a responsible human adult, crossing all the stages of life from kids, adolescence and teenage, the parents also evolve along with them with new understanding and knowledge in all the phases of growth. Be it from the nervous, haggard, and tired new mother, to the very patient, understanding and sometimes worried parent of a teenager, we have seen and done all of it. And in this process of evolution, each and every single day we try to impart all the primary education on life skills, teaching them how to cope with different stresses so that our kids grow up to become strong adults who have the confidence and capacity to face any and all the challenges head-on that the big wide world throws in their way. And amongst all the life skills, financial skill is also an integral part.
As banking is a part of my routine work, I made a conscious attempt to impart financial knowledge to my little boys. However, before I began, like many parents out there, we too were bogged down by some confusing questions like, do we really need to talk about money to kids? Will they feel burdened if we discuss money matters with them? Aren’t they too young to discuss about saving, budgeting, financial planning and investing when they should have a happy and carefree childhood? I believe, these are few of the questions which most of the parents asks themselves when they think about imparting financial education to kids and I was no different from it.
Readers, I believe imparting real-life financial skills to children prepares them to handle money effectively in real life and they find it easier to manage their personal finances in their adult life. It also helps them to know the value of money and the right knowledge and skills required for taking responsible financial decisions. Educating the children in money management is becoming more important in the current scenario of worldwide pandemic ravaging the economy, with the children also becoming aware of the impact it has on their parents’ income, where many of us are either under the threat of losing jobs or may already have been retrenched from our jobs.
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Educating kids in financial skills could be started at an early age as kids are always full of curiosity and eager to learn new things almost every day. The real magic trick is to make the whole process along with education, fun, interesting and entertaining so that kids doesn’t lose interest and find it bothersome. I personally believe Fun should always precede the education when we are with kids. I mean, many of us would agree that talking financials bore even the grownups sometimes.
1. The story begins with the Piggy Bank:
We gifted our kids their first Piggy Bank when they had the first lesson about money in school. But even before that both me and my hubby had the habit of keeping all those small changes in a transparent storage jar of our own. So, it wasn’t a tough task to show them where all those loose changes need to go and how they keep on growing when you start storing/ saving them. Children have their preliminary lessons on life skill at home. Mostly, they learn by imitating and copying others around them. So, it becomes really necessary to start them off on the path of saving and handling money which the Piggy bank really helps.
2. Knowing the priorities:The game of Needs and want:
One of the greatest fears in today’s parents for their kids is that they may not understand the value of money where both money and things that money can buy are in abundance. So, it is really very important that they can differentiate between the 'needs' and 'wants'. This will help them set their priorities and know where to spend their money.
Need: It is something which is essential for life, a necessity, something required.
Want: It is something which is non-essential but wished for, a desire.
Using these definitions kids can be taught financial discipline. We have made it a game for us. We list down few items and ask the kids to classify into wants and needs.
The kids loved it and so we played it a lot. In fact, most of the days, while we are in the midst of something like drinking water and out comes the question “Drinking water- say Need or Want?” Once it is answered out comes the next- “what about the fizzy drink?”
3. Example is better than precept. An apt idiom to practice:
The primary education on all life skills of children begins from home. And the children learn by observing and copying or imitating their parents. So, parents should avoid squandering on unnecessary goods or which may be avoided as the child will learn only by practice and not what he is advised. Maintaining a certain amount of financial discipline by parents brings the same sort of financial behaviour in their kids. The most important lesson a child should be made to learn is not to expect the fulfilment of all the wants just because their parents can afford. Probably the most common demand from kids which we have faced on more than one occasion is “My friend has this video game or this brand of mobile or laptop etc”. Well peer pressure is definitely there but he/she must be made to understand what is within their limit of expense and why it is not important to get those things just because someone else has it.
4. Let them choose. Make them choose the best:
For all of us festive season means buying new clothes be it dress, shirts or shoes etc. and more so for the kids. Festive season has started in India so naturally whenever we talk over phone these days within our family, mostly it revolves around who has bought what and for whom. During one of such conversation my Sister in Law from Guwahati narrated the incident of her early teenage son and a fitness guru of his generation (Being Dan in Karate he is the inspiration of all his cousins) who had gone for buying a pair of sports shoes for himself and for his mom for her Yoga classes. However, before going shopping he had surfed the Net thoroughly doing product research and comparison. What impressed me most was the final line when she said that finally we realised my son knows about all the brands of shoes in the showroom more than the salesperson. It is the most important lesson for the child to know and appreciate the value of money. They should be made to realise the things that they are purchasing whether, it is worth their money so that they can make the purchase within a certain budget. I am glad that my dear nephew has learned this lesson much early in life.
5. Tell them about banks, ATMs, cheques, credit cards once they have reached teenage:
For me and my sisters, our introduction to Banks were made when we were teenagers, and we were allowed by our Mother to go to the bank for depositing money in Savings and Recurring deposits. Although it is different for my kids, as I am related to banking, so they were introduced much earlier. It is very much essential to introduce a child to banks and all its related services before he/she leaves home for higher studies. Today all parents open bank accounts and most of banking transactions happens through alternative channels and mostly on the click, scan, and swipe of a smart phone. So, it is very convenient to introduce the child to money management, providing financial independence while virtually supervising them.
6. Involve them in family budget.
A person who is good in budgeting most often leads a financial bliss life. However, perfecting the budgeting skill doesn’t happen to everyone naturally. We hardly tend to involve children while discussing budgets of the family. But I believe parents must encourage their children to be financially smart. They should be made to learn what are expenses and savings, and what ratio should be maintained so that they remain debt free. The most common thumb rule is almost 30-40% of earnings should go to savings so that they have a safe financial cushion to fall back when needed. So why not discuss and plan the next holiday together with the whole family. Where to go, where to stay, what places to visit, what all things needed to buy before the trip, how much to spend, how much to be kept for spending on buying at destination shops etc. A good budgeting skill will definitely help them a lot to manage their money efficiently once they are in college and even after that.
Like all lessons of life, lesson to expertize in money management also comes from practice. Learning to balance between income and expenditure is not a lesson for kids but we, as parents, being the best judge of our kid’s development, should also be the one to decide when to introduce them to financials. However, whenever one decides to begin, financial education should be imparted in small and practical doses which can prepare them for earning professionally and spending judiciously and saving and investing dextrously.