Money, honey
Very few parents take the effort to teach kids about this important instrument in life
Becoming a parent is exciting. It is a life event like no other. It is what comes later that makes it tricky. Providing for the baby, giving her the right nutrition, education, inculcating good life habits, school, college, etc., and the list goes on. Parents put a lot of energy and effort into all these matters. However, there is this one thing that very few parents teach their kids – money management.
Money is one of the biggest deciding factors when it comes to how we live, what kind of a home we own, which car we drive, and what social status we enjoy, among other stuff. Yet, many parents completely ignore it by treating it as taboo and never discussing it with their kids.
Kids with bad money habits end up piling debts and finally ruin their entire lives servicing them. Worse, they pass it on to their kids too. This study shows how parental debt adversely impacts the socioeconomic well-being of a child. Many kids do not have access to a good life simply because of their parents’ bad money management. This report by the CRIF – one of India’s leading credit information companies – suggests that education loans in India shrunk by 25% because of students not being able to pay back the debt. This would definitely have put extra stress on parents’ finances too. The COVID-19 pandemic has just made it worse for parents and students alike.
But what is good is that we are opening up to the idea of teaching kids about money. For instance, the Reserve Bank of India (RBI) in its National Strategy for Financial Education has suggested a 5-core action plan to promote financial education.
As parents, we must look for ways to give our kids the financial freedom they deserve. This means we start teaching them about money early on and do not make the same mistakes that we or our parents may have made. While COVID-19 has shown how uncertain the future could be, we can only hedge against it by educating our kids about money.
Here are 3 simple ways to explain money and get your kid to be financially responsible.
Teach your kid the basics of money
Ask any artist, scientist, or entrepreneur about the key to success and she will rightly point toward the basics. Lay the foundation of money by educating your kid what money is, how it works in the real world, what budgeting is, how to earn, how to invest, etc. Here are some books, podcasts, and movies on how to teach money to kids.
Books
Zerodha recently launched a series of 5 books called the Rupee Tales which focuses on saving, taxes, insurance, stocks, and banking through beautifully illustrated stories. You can download them as PDFs. The RBI has many books on money for kids of all ages like Raju and The Money Tree, which teaches the basics of banking to kids through stories. Pratham Books has several books with stories and real-life examples of money management.
There is several international books too. Like Neale S. Godfrey’s Ultimate Kids’ Money Book, which explains savings account, credit cards, banks, and other stuff through simple charts, photographs, and illustrations. Devon Kinch’s Pretty Penny series is a funny yet serious take on money for kids through beautifully the illustrated story of little Emma. Investopedia has a list of books. While this is a very small list, it will get your kid introduced to money in a manner that will interest her.
Podcasts
Indians are still getting used to podcasts and so there are very few of them on this topic. The Paisa Vaisa podcast on IVM Podcasts has a kids-special series on introducing personal finance to kids. The series covers mutual funds, investments, and bitcoins, among other topics.
Other than these, you can also listen to some international podcasts since the principles of money management remain the same. The Money with Mak and G podcast is one of the longest-running podcasts on money for kids and adults by twins Mak and G. The Money Jar podcast is another podcast about kids, family, and money with a long list of listens. Listen to these podcasts with your kid. Maybe you will learn a thing or two about finance too. Podcast is a really fun medium and your kid will love it.
Movies
Willy Wonka & the Chocolate Factory is a movie that shows how integrity is more important than money. The awesome Aladdin while being so cool to watch also teaches about the importance of relationships while juggling with being wealthy. The 2009 movie Up is a heart-warming story of a couple who saves up for things they want to do. Though money matters, it is important for kids to know how to balance it with other stuff in life.
Get your kid to save money
The good old piggy bank is a real winner. It teaches patience, saving for the long term, and how to get through rainy days. Start with a piggy bank when your kid is a toddler and gradually move on to a savings account when she gets to school. You can also set goals like saving up for the birthday party, Diwali gifts, getting a bicycle, etc. This small action will set your kid for life. Get your piggy bank from this selection on Amazon or the lovely owl-shaped money bank from Hamleys. I vote for the owl.
Make your kid play money games
No one teaches better than practice and this is where your kid gets her hands dirty. Money games will add the x-factor required for your kid to make correct financial decisions. Strategic thinking, setting up a business, managing cash, and living within means being a few. Start with the good old Business, a simple game that teaches about buying, saving, and spending. Play the game with your kid. It will bring back memories of your good childhood days. A cousin of Business is Monopoly, a game so great that it can claim to be an institution. You can get it too from Amazon. Game for Life simulates how it is to manage money throughout an entire lifetime. This is exactly what you need. Here is another list of money games for kids of all ages.
While this is a small list, it is upon you to teach your child the value of money. Go make the best of it.
Have ideas on financial education for kids? Share it with the community in the comments section.
#GoodRead Working Parents, Give Yourself Permission to Recharge from Harvard Business Review
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