Given the head-spinning pace of change in the world we live in, most parents of school going kids around the world want their kids to be adept at the basics of money management and financial know-how. It’s a well-established fact that kids develop a big part of their financial personalities by the age of 7, and are capable of learning basic concepts about money when they are as little as 3.
Unfortunately, despite knowing this, parents can often be at a loss about what the right thing to do is, when it comes to putting this awareness into actual action. And so, they often default to intermittent and unstructured conversations about family finances with the kids. That’s a really good start, and far more than what most of us had while growing up. But it’s not nearly enough.
So, here are some things unconventional lessons and topics parents of young children should regularly incorporate in their interactions and exercises around the idea of money with their kids:
Be flexible in your approach to money
One of the most important money lessons a kid can ever learn is not thinking about losses or mis-steps as final or a signal that they’re “not good/smart enough” to make financial decisions. Sure, losses they experience in life will be the result of mistakes or bad decisions. But others might be the result of fluctuations or market conditions.
It is important for kids to know that sometimes, you can do everything right and things might still not work out the way you had hoped. The sting might be more painful when it’s actual money being lost, but it shouldn’t deter them from the idea of trying to achieve their goals again – albeit after learning the lessons they needed to learn from an unsavory situation. A lot of the time, what separates the ones who make it and the ones who don’t is simply who kept learning and kept going.
Invest heavily in self-improvement
The world we live in often nudges us to prioritise things over experiences or learning. Most people won’t think twice before spending a few thousand over branded clothing, but will endlessly wonder whether a book or an educational experience should cost “that much”.
One of the most important investment lessons kids can learn is not just saving and investing what has been saved, but spending money as an investment that can have a multiplier effect in terms of the value it delivers to our life in the long run – like in the case of knowledge and education.
More parents need to teach their children the value of investing in improving themselves – physically, mentally, and knowledge-wise. And also, lead by example in this regard.
Value and worth are not the same things
This is a tricky one. Even adults can mistakenly conflate the worth (the monetary cost) of something with its value (what it can do for us). More so, this is done so often and without thinking, that kids then start modelling the same behaviour.
The result is over-indexing on things that cost more because we’ve conditioned ourselves to believe they are more valuable, when they are actually not. And it becomes a feedback loop that the brain then finds very difficult to break. An example of this is all the times we’re practically obsessed with the idea of owning something branded, even if the same or similar thing is available for a fraction of the cost, but is somehow unacceptable to us
There’s nothing wrong with wanting to be rich… Very rich!
Shockingly, many adults are scared of money – to the extent that they’ve made themselves believe that wanting to be rich is almost a bad thing! In reality, the drive to be rich and famous can open up pathways to innovation and humanity-propelling ideas. Wanting to be rich is not bad, doing evil things once wealth has been amassed is. More parents need to teach their kids this valuable life lesson, very early in life.
Be very careful who you listen to…
…Especially in the age of self-proclaimed financial gurus and influencers who have no skin in the game. There have been so many instances of youngsters amassing massive debts or incurring monumental losses in the pursuit of a lifestyle far beyond their means.
The unverified financial gyaan (Wisdom/Knowledge) and unrealistic idea of work and life that impressionable young minds are constantly being exposed to thanks to the all-pervasive social media is worrisome. P
arents need to constantly devise strategies and engage in conversations that will help their kids adopt a healthy sceptical attitude while listening to free advice from people without real degrees on the internet!
-The author is Founder, Finchamps (Brightchamps). Views expressed are personal.
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