Teaching children about finances
It is no secret that the children of today are exposed to very different childhood experiences than the children from even a decade ago.
There is more accessible information and more choices in pretty much everything - absorbable content, play methods, and even learning experiences!
And parents are more open to encourage their children to be a part of these experiences too.
So, why not expand the boundaries of what we expose our kids to - and open up the window to the world of financial literacy?
I can understand that it can be a bit daunting to think of our kids as being ‘grown-up’ enough to understand the ups and downs of the financial world.
I can also empathise with the need to protect their childhoods from stress and worry. After all, none of us want our kids to worry about how much we make, what we can afford, or feel guilty for wanting nice things!
But here’s a thought - I truly believe that our kids need strong financial foundations precisely so they don’t develop negative attitudes and viewpoints about money!
How many times have you been stunned by what your child has picked up from you or your spouse, or conversations you thought they weren’t paying attention to?
We may not see it in action until much later, but kids inherit a bit part of their financial attitudes and habits from their parents — both the good and the not-so-great ones, unless they are exposed to accurate information and informed, expert-based opinions at a time when they are absorbing everything like hungry sponges!
So let me dispel this myth. I’m not saying kids need financial literacy so they can become stock brokers or accountants or financial gurus in the future. I’m saying they need solid foundations in financial literacy at an early age because what could well be what sets the stage for better money management and smarter, more responsible decision-making about finances in the future!
If we’re going to make their eyes glaze with endless books and complicated jargon, of course, they’re not going to be interested or learn anything meaningfully.
But if we help them see their learning in action by presenting them with real-world scenarios they see unfolding in their own surroundings - there is no limit to what they can take away. This is the reason why simulations, quizzes, puzzles, interactive projects and expert interactions must be made central to the way we impart knowledge about money.
I’m often asked by confused parents why kids even need financial literacy at such a young age. What I want parents to know is that they should have this knowledge, so they never have to feel ill-equipped or scared of money in the future.
When the paycheque arrives, they will, eventually, figure out the basics of investments.
Or they will do what so many adults secretly do outsource the responsibility to someone else in the hopes that this someone else will act in their best interests.
I feel so strongly about financial literacy for kids because I never want my own kids to feel handicapped in such an important area of life.
So much of what we do hinges on money.
And yet, it’s startling how poorly informed so many of us are about this very part of life.
This belief is strengthened by the sea changes that financial instruments and institutions have undergone in my own lifetime! In today’s world, finance is not limited to just paper money and traditional banking and investment schemes.
The world of money has expanded to include digital cash, different credit options, cryptocurrency, DeFi, financial technology, investment instruments such as annuities, bonds, mutual funds, and so much more - some of which even adults don’t know the meaning of!
Did you know that only 27% of the Indian population is financially literate?
To me, that’s alarming. And it makes me worry about the generations that come after.
But we also know that with sound financial literacy and training from an early age, our kids could stand to increase their lifetime earnings by 150%. Now which parent doesn’t want that for their kid?
I truly believe that there’s more to money than just spending and saving.
Financial literacy is as much about responsibility and discipline, as it is about money tools! A good financial literacy program helps kids understand money for sure, but more than that, it seeks to reshape kids’ relationship with it, making them understand that money is neither to be feared nor something to be in awe of. It is simply an important tool — one among many in life — and what it does for us depends entirely on what we choose to do with it.
Today’s children are going to be the ones writing the course of tomorrow’s world. I believe it’s our responsibility to empower them with all the skills and knowledge they will need to write the future, today.