In today’s world, our children learn about various things in addition to their academics. Depending on interest of the child and aspiration of parents, kids are exposed to sports, fine arts, coding, cooking etc. and they excel in one or more of them. The article aims to introduce them one more area of learning – Financial Knowledge, that will enable children to lead a financially sound and successful life.
As parents, we always have a dilemma as to when we should introduce them to a “serious” topic like finance. Shouldn’t we allow them to enjoy their childhood? The adult life is any way about money, salary, budgets, mortgages, EMIs, shouldn’t we spare them from all this?
While discussions about the above aspects may not be necessary, it is important to introduce them to simpler aspects that are relevant to them at their age. To keep them completely blind on financial knowledge would do them more harm than good, especially when they grow up.
Why should we start early?
The world has changed very fast in the last 20 years and the rate of change has accelerated in the last few years. With the introduction of Amazon, OTT platforms, Online-learning options etc., the current generation is spoilt for choice, the market place is wide and it is important that they make their choice / decision wisely. One could buy the same service or product for very different price.
We have “unlimited wants and limited means”. It is more important than ever to be financially smart to maximize the value we intend to gain or experience.
Every discipline that the child learns at young age is habit forming, teach them to take a “No” for answer, they will be better prepared to face the world when they grow up.
Meeting a child’s demand or expectation progressively diminishes as they grow. It is easier to buy a toy Ferrari than to buy a real one.
How do we go about inculcating financial discipline?
The sooner we expose them to real world experience the better it is for them. Send them to a nearby grocery store, let them review the bill and collect correct change. Teach them to take stock of their belongings – clothes/uniform, stationary, sports equipment’s, racquet, shuttle, sneakers. Fix a timeline to replace or replenish them; this will ensure the kids don’t growth with a sense of entitlement and will take responsibility. Empower them to organize events, their own birthday within a budget. They will learn to make decisions on the number of invitees, return gifts, cake, food, celebration etc.
As parents, we have role to play, “invest” in your child to learning a skill, buying a book and “spend” less on toys, dresses, entertainment, food and other indulgences.
Kids learn from us, deter from succumbing to peer pressure. It is inevitable that a neighbour or classmate has better gadget or fancy cycle or goes on foreign holiday. It is important to talk to your child about what they get, that other kids do not get.
What to expect when we educate
It is natural that the kid may be disappointed when they hear a “No”. It is “Ok” to disappoint them today than when they are grown up. They have the strength, smartness and resilience to overcome disappointments.
Like any other learning process, the child will make mistakes in this learning as well. For example, the child may not collect the correct change from a store or lose / damage their belongings etc. Since it involves money, we need to have more patience and perseverance.
Lastly, every child will have their own pace of learning, inclination will differ, hence it is critical that we do not compare own child with any other, including their sibling(s).
Wishing you and your child(ren) the very best!!! Happy learning…
Contributed to Campus K by Arun Narayanan, father of Swamy Arun (UKG). Arun is a qualified Chartered Accountant and holds a MBA from IIM Indore. He is a senior finance professional in one of the fortune 500 company. If you wish to contact him, you can mail him at firstname.lastname@example.org