By Shweta Khanna Bhandral
Like all the other relationships, each one of us has a relationship with money too. The calmer it is, the better. Since 2015, household debt per person in India has grown at an average annual rate of 16%, from Rs. 9,017 to Rs. 16,239. Though this is modest if adjected to inflation, but debt is a significant issue in our country, and it’s rooted in financial illiteracy. Not only this, but there are also other fears attached to money and its management, which lead to either unfulfilled dreams or living a frugal life after retirement. A research that was done by the University of Cambridge, UK, tells us that a child starts understanding money at the age of three. It also points out that by the time a child is seven, he/she has formed their money habits. Hence playing monopoly is not the only way to introduce kids to money and matters related to it. Parents are the number one influence on the child in financial matters. So, Grab the daily opportunities. Example – while standing in a line waiting for a chance on the swing tell your 3-year-old how important it is to wait to get the desired result. Inspire them to give, and share maybe by celebrating their birthday with kids at an orphanage a day before you do it with a grand party at home or in a hotel.
While shopping in a mall or a grocery store, children typically demand things they find attractive. You cannot tell them that you do not have money to buy. In situations like these, I have an exercise that always did the trick for me. I would ask my daughter to make the list of things she really needed; mind you use the right word NEED not WANT. During our mall visits, we use to look around and then I would give her 10min to list. Together we would strike the things, which were not needed. This trick saved me from a lot of unnecessary expenditure. Now when we go to a store, and anyone of us picks up something that we do not need, she is the first one to question.
Being transparent and clear to your child always helps. On my daughter’s 5th birthday, I took her to Hamleys, as we entered the store, the excitement on her face was matchless. She went around the store looked at things, picked up two toys and then came to me to do the math. Actually, before entering the store, I told her that I have 5000 rupees for her to buy a gift. We paid at the counter, the toys she chose were for 4500 approximately, so I told her that she had saved around 500 rupees from her gift money. She asked me gently could we have our burgers in that much.
As they grow and start calculating bigger numbers, please encourage them to make payments at the cash counter in stores. Such activities initiate confidence in dealing with and handling money. At the same time, also introduce kids to the concept of a piggy bank. I was introduced to the idea of the piggy bank when I was 5. All the money that we would get as gift use to go in that piggy bank. We use to break it every year on Diwali. I continued this tradition with my daughter. There is a fine line between lecture and discussion, and that line is listening. In these early years little things matter, so answer their questions and listen to their stories. At the age of seven, I started giving my daughter pocket money. We began with 50 rupees a month. I was not surprised when I saw her saving money from her monthly allowance. Still, I asked her what is she saving for, and she said a bar of particular chocolate which costs more than 50 bucks. At the age of 8, We went to the bank with all her piggy bank money and opened a junior savings bank account. She was excited to fill the deposit slip and interact with the banker. Now, She enquires about how the money is growing in her bank account.
So, here is a ready reckoner of simple things that you can do with your kids.
1. Create three jars – Saving, Spending and Sharing along with your child, and you should also regularly let them handle money.
2. Help them set goals – next step to making a list while shopping could be helping them establish a goal. Please encourage them to save for the item they need and set a reasonable time frame for it. Remember to fill in if they don’t reach the desired amount.
3. Compare prices of items while shopping. Discuss with them why you buy a particular brand and why you do not want to buy the other. Talk to them about quality, quantity, and durability.
4. Involve them in more significant decision making by just letting them know about it. I remember my father telling us about the loan that he took for building our own house and thus he will be getting home a little less money for the few coming years.
5. As they enter teens, you can start talking to them about the power of compounding. Talk to them about how money grows when we invest, and that saving is not enough.
