There’s never a dull moment when you have kids around. They tend to say and do the darnedest things. And while watching them grow is an adventure in itself, as parents you want to make sure you give your kids the best you possibly can— education, nutrition, clothing and life skills. A big part of learning important life skills is gaining financial independence and becoming responsible with money. Meenakshi Khanna, content expert at Sesame Workshop, India, demonstrates simple ways to teach your children the importance of saving from a young age
A CHILD’S formative years, between the ages of zero to six, is perhaps considered the most critical period of learning, as this is the time when brain development is at its peak. Your child is learning to navigate his way around the tiny world he lives in, is developing language and social skills, and is even experiencing various emotional developments. Values, morals and life skills inculcated at a time like this, when your child’s brain is like a sponge, absorbing everything he sees and hears, will help your child develop into a well-rounded and responsible adult. This makes it important to teach your children the importance and value of saving money, particularly when your child is eager to learn.
Financial empowerment goes beyond just saving money; it means having goals and aspirations, planning and finding means and the right information to achieve those goals. The concept of financial empowerment should be exercised when children are young, as their minds are open to understanding concepts and building notions. Of course, this means you need to avoid financial jargon, and make the lesson as simple as possible—encourage their dreams and aspirations, help them set goals, and then, formulate a plan to achieve them. This will enable them to put into practice the skills of planning, saving and sharing.
LEAD BY EXAMPLE
It’s a known fact that children often emulate their parents. This makes it important for you to be their role models and quite literally, practice what you teach. If you adopt a healthy financial behaviour, there’s a good chance your children will learn from you and do the same. After all, if they see their parents saving money, they also begin to save the money they earn from simple household chores. More importantly, explain why you chose to save the money instead of spending it. This will help them realise the importance of avoiding frivolous purchases, and help make sound investments in the future. They begin to understand the concept of saving i.e. collecting enough money to buy something that is strongly desired. Parents can create a savings jar (and give their children piggy banks) where they can put money in while the child is watching. This way the child will see the money grow and understand the concept better, and at the same time observe that saving is a part of everyday life. It will also inculcate the habit of delayed gratification in the child which is essential for healthy development.
NEEDS VS WANTS
There’s no doubt that wants and desires are a big part of every life, even for a child. Something as simple or innocent as wanting an extra cookie can be alluded to desires. Parents need to effectively communicate to their children how a need will always have a higher financial priority over a want. It’s simple, really: wants can wait, needs should be addressed immediately. For example, your child may need a new uniform because he has grown out of the old one. A want would be the latest school bag or pencil box because a classmate might have a better one than he does. By presenting facts and examples, parents can help their child understand how money spent on a new uniform over a pencil box takes precedence. Most often, kids find it is hard to wait for the things that they want. For example, if you give your child a cookie every time he does something right, we’re sure he can’t wait to gobble it right up. However, explain how it’s going to be better if he saves it for a later time, because then he’ll have many more cookies to treat himself to. Then relate that to money and gratification, and he will slowly grasp the concept. While this is a difficult skill for kids to understand and adopt, parents need to be patient and encourage them. Of course, there’s plenty of visual aid and catchy songs that can help you on the quest to making your children responsible. Take for example the ‘Needs Vs Wants’ song by Galli Galli Sim Sim where Elmo’s mother teaches him that woolen clothes that he needs for winters are more important than a belt which he can buy later as well.
MAKE THE LESSONS FUN
Children have low attention spans so you want to make sure that when you are giving them a lesson in financial empowerment, they don’t know it’s a lesson but look at it as a game. It’s extremely important that you make it fun and engaging. Saving is a kind of waiting—waiting to collect enough money to use it later to buy something they want. So when a child learns to wait they are learning the basics of selfregulation. This also means that parents need to make their kids aware by having three different kinds of savings or piggy banks—one is a ‘savings-only’ bank when they put away money for when they truly need it; one is a ‘spending bank’ where kids put away money to spend it on something they want to buy; finally, one is a ‘sharing bank’ that can be set aside to share with or help those in need. The video ‘For Me, For You, For Later’ is one way to appeal to the sensibilities of younger kids, while teaching them a valuable lesson. Here, Elmo is shown putting his money in three different colourful piggy banks, to help with his financial independence.
As your children get older, you will need to come up with new ways to teach them about savings, but it is definitely worth starting when they are young. An early start means they will better understand the concept of earning and saving, and have a greater value for the money they receive. The early years are perhaps the ideal time to help your child understanding concepts and build habits. After all, financial empowerment at an early age can only help them make well-informed decisions tomorrow. ■