“Teaching kids to count is fine but teaching them what counts is best.” —Bob Talbert, American columnist
This quote lies at the core of the philosophy behind teaching fiscal responsibility to children. Parents and teachers focus on math and other artistic skills, with kids as young as four years old being enrolled in esoteric classes to get a head start in life. But amid all these classes, we forget to impart an important life skill—financial literacy. How many of us realise that when our kids enter the real world, the first thing they confront is money? As a wealth adviser, I have seen that when it comes to money, smart people commit blunders, whether it is in dealing with banks, taking loans or making investments.
This is the reason one should begin teaching money management to kids at a very young age. The best time to do this is between 5 and 12 years, which is not to say that those above 12 years do not appreciate this concept. They do when the content is interesting, but it takes a little more time for them to understand the importance because they have developed deep-rooted habits and have turned into consumers. As they enter the teenage or beyond the sixth grade, they become hardwired because of peer pressure and external environment. So it becomes difficult to get them to adhere to a financial literacy programme. At this stage in their lives, they are keen to buy mobile phones, gadgets, branded clothes and do things that their friends are doing. Telling them to act sensibly and responsibly might be a tall order if you have not inculcated good habits from an early age. In fact, it is a good idea to introduce financial literacy as a subject in school from Class I itself.
Many of you probably give your children pocket money, but what you don’t realise is that this does not teach them the value of money or how to manage it. Most parents do not take the initiative to teach their children about money. They may touch on the concept of piggy banks and savings early on, but are usually reluctant to discuss money and family finances with their children. In the Indian context, money is a touchy issue, and in terms of discussing sensitive topics, ranks as high as sex education. The best way to teach kids about money is to let them deal with money early on for they need to understand its power and the consequences of their decisions.
It’s far better that they commit mistakes at a young age with smaller amounts of money than financial blunders when they grow up. By starting early, you can give your children a strong competitive edge for their future financial success. The key learning points for kids should include having healthy values about money, setting goals and priorities, making prudent choices, delaying instant gratification and understanding the virtues of hard work. Also, don’t forget that even though you might not teach your kids directly, they are learning by observing you.
AMAR PANDIT Financial planner and author of The Art and Science of Teaching Children about Money.
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