Money is not child's play

How to get children to understand the value of money?

At a workshop conducted recently in a leading school in Delhi, students aged 5 to 18 were asked how many of them had their own mobile phones. Almost 90 per cent of the hands shot up.

“The remaining 10 per cent would also have raised their hands had their teachers not been in the room,” says Chidambara Sagar, co-founder of Sanchayan Society which organised the workshop, one of the many it holds on financial literacy for young adults. This school was no exception. The response of students from well-to-do families is similar at practically every school.

 

For the growing population of ‘privileged young adults’ in the 12 to 18 age bracket, it seems, money isn’t something that has to be earned, spent with prudence and, even less, saved for a rainy day. It’s not talked about at home or perceived as an issue that deserves thought. The result: Most teenagers find it hard to grasp the value of money or the importance of using it responsibly.

Jyoti Bose, director of Springdales School, Dhaula Kuan (Delhi), finds the trend worrying. “Most children today believe that to stand out, you have to conspicuously consume,” she says. And parents, she adds, are not helping change this attitude. “When children demand, many parents simply direct them to their wallet,” says Bose.

If access to money is becoming easier, the amount at children’s disposal is increasing too. Mobile phones are now a matter of right, there’s enough cash to eat out regularly and emergency means not having enough money to pay for treats and movies with friends at the multiplex. “In times of such ‘emergency’, the parent’s credit card comes handy,” says Avik Kedia, a chartered accountant who co-founded the Sanchayan Society to help inculcate healthy financial habits in students. “Not only do many students use debit and credit cards, they even sign on the slips on behalf of their parents,” he says. That credit card companies charge a hefty interest rate — even up to 48 per cent a year on the outstanding balance — is a fact not many are aware of.

Money wise
But financial prudence is not learnt in a day — such education has to start at home, when the child is as young as five or six. “Discuss the boundaries of money,” advices child psychologist Dr Amit Sen. “Tell them that while Rs 300 might mean a bucket of popcorn for you at a cineplex, it might mean a week’s meal for some poor child,” he says.

An idea as basic as a piggybank can be the first step towards making children money-smart. Sanchayan found that in a class of 50 students, only about 10 put their money in a piggybank or give it to their parents for safekeeping or better still, deposited it in their bank account. But a few students went to the banks themselves. “More than opening a joint account with the child, it’s important to let him operate the account under your supervision and guidance,” says Sen. This simple lesson in budgeting and financial planning gives the child a sense of empowerment and the incentive to save more.

Bose, however, has a word of caution. “While budgeting is fine, it’s important to know how much the child is spending and on what. If the child has spent Rs 800 on pizza, it’s not right even if it was his own pocket money,” she says. Now, if the young adult had ‘earned’ that Rs 800, it’s more likely that he would have spent it more judiciously.

Sneh Anand, a 16-year-old student of Class XI, admits that till about three years ago, he wouldn’t think twice before splurging with friends. Until his father put his foot down. Anand was told that if he wanted money over and above his monthly allowance, he would have to earn it by maintaining a certain level of grades. It was a tricky situation, especially at times his peers had more money than him. “I did feel embarrassed then, and even a little angry with my father,” Anand admits. But his father was able to reason with him. Now, Anand says, he’s able to cope better financially than many of his friends.

Small lessons such as these also make the child aware of the sacrifices parents make, like giving up family time to earn money and keep a stable job, says Sagar.

Teach them young
Money is no child’s play. But it helps if children learn about money matters early. While good ol’ board games like Monopoly have been trying to do so for decades — Monopoly’s own history can be traced back to 1903 — in recent years, the Reserve Bank of India, too, has launched ‘Project Financial Literacy’ which reaches out to children through comic strips, films and games. SEBI also has a ‘School Financial Literacy Programme’ that teaches students from classes VIII to XII about saving, budgeting, money management and investment skills. And through CBSE, the government is now working to make ‘financial literacy’ a compulsory subject at the senior secondary level.

Money management is a life-long learning process, says Sagar. “And children,” she says, “have to start early to stay informed and ahead of the curve.” That’s certainly better than learning about money the hard way.