Question hour for parents

Fending off financial queries from children can be difficult. Some answers...

Seema Joshi, a sales manager, found it quite difficult to explain to her son Kabir why he could not give expensive return gifts on his birthday. “I may keep harping on the utility factor of gifts, but he would rather look at the price tag,” says an exasperated Joshi.

Similarly, Meena Jain had to weave a story around a Ferrari that could be bought in the future should her son Anay save his uncle’s monetary gift.

And, it’s not just the Jains or Joshis who repeatedly have to fend off tricky financial questions from their children. All parents will agree that queries such as “why is our home smaller than my classmate’s?” or “why are we going for a local holiday while our neighbours are going abroad?” are asked frequently. The answers, often, have to be creative.

“Children can’t exercise discretion and tend to discuss everything with friends. It is, therefore, difficult to give them honest answers for you never know who these would reach,” explains 37-year-old Shweta Agarwal. Hence, when her nine-year-old son Rachit asked her why they didn’t have a car like their friend’s, she pacified him by saying his cousin’s cars were their own as well. But here’s a warning. “Financial questions must be handled carefully as they can damage the child’s self-confidence. He/she may consider himself less worthy than his friends,” warns certified financial planner Amar Pandit.

The other option: You can explain the utility to make him/her realise its worth. When Agarwal’s son wanted a Play Station 3 like his friends, she played up the positives of his gaming console to divert his attention.

Jain’s approach whereby she asked son Anay to save for the Ferrari gets financial planners’ approval. “Taking a savings-linked-with-gratification approach is a good idea to prepare children for managing finances later in life. By over-indulging, parents make it impossible for children to delay gratification,” says Pandit.

Teenagers ask more pointed questions. Forty-year-old Seema Joshi’s 13-year-old son asked why they were staying in a rented apartment. “We had to explain it to him that the locality was closer to his school. Later, we decided to include him in some of our financial discussions,” says Joshi.

But this line is also fraught with danger. “Since their understanding is constricted, children tend to assume the worst quite easily. If you refuse them something, they may feel they are poor,” says counsellor Dr Amrish Bhatt.

In situations such as Joshi’s, children mostly need a reassurance that all is well. To teach them about managing finances, you may include them in monthly budgeting. You could give your child a budget and ask him/her to buy the essentials within that budget. You could also introduce the child to savings. Adopting a carrot approach will help drive home the point well.

Another age-old concept is pocket money. “This gives the kid a sense of ownership as well as responsibility. They learn to be judicious about their money,” says Gaurav Mashruwala, certified financial planner.

While most questions can be answered with partial truths, some may leave you stumped, such as “who earns more – mom or dad?” or “are we rich?” Responses to these questions not just communicate your financial affairs, but also shape your child’s outlook on subjects such as equality of parents. Responses to these questions should be guided by the reasons behind them, says Mashruwala. Like, are they comparing themselves to their peers or are just anxious?

Or, take the beaten path. Are we rich? Yes, we are. We have lots of relatives and friends and ample love. True, it is clichéd, but may work just fine.