Friday, November 13, 2009


The lots of mail were received , during the month, from our readers asking for the best time to teach their wards the value of money. Some of the young parents mentioned that in their family the discussions on family silvers, wealth and money earned by parent were never discussed. In fact it was considered as bad manners if children tries to take part in money matters of the family. Children were expected to study and play and parent always need to fend for them. But the perception has changed in twenty first century. It is now required that children should know the value of money early in Life. Now the question arises how early children should start hands on training on money management?

It is now felt that children should have hands on experience of handling money from early age. But why? It is because the req an> an>uirment of money has multiplied. The life style of people have undergone tremeddous change. The life on earth have beccome competitive. This competitivnes have increased the necessity of money. Thee earning have not multiplied. But expenses have gone up tremedously. In sam mariage of a daughteer was not veery expensive affairs. Today it has changed . In fifties of tweentyeth century birth of the clebration ws completed with offering to God and feeding "para manna" to all his neighbour friends of the birthday boy. Today birth day is big affairs and cost enormously. the expectation of children have gone up. If children are allowed to have hand son experience of handling money they would at least get an opportunity to learn of the value of money. So at what time the concept of money should be introduced to the life of children?

This is not a easy question. Different societies have different approach to money. Children are allowed to handle money from the early childhoodd in Rajasthan, MP andd Up but in south India and in Northeast India children handles money after going to college only. However many citizens have been forced to talk openly now to their children as the money has become dearer due to price rise, non availability of cash flow duee to recession, pay cuts and job loss. According to a reecent survey by T. Rowe Price Group, nearly hlaf of the parents of school going children have used the recession as the catalyst to talk about money to their children.

The question when children should be allowed to handle money. The answer is as soon as the children start exploring outside world. According to an expert on child psychology children should be introduced to money matters as soon as he develops his want for any product or object like toy, chocolate, book, etc. What could be age ? The children start his demand when he becomes four years of age. This is would be the right age to introduce him to money. Till this age children feels that whatever he desires would come from anywhere. He develops a desire and that would be fulfilled. How it gets fulfilled is not his
outlook. This is the time a healthy outlook needs to be developed in child, as per expert on the child psychology.

Indian parents are much hesitant to talk about money to their children .Parents feel like sex education money education should start at school .This is inherent hesitation of indian parents.According Laura Levline, an expert on Finaical literacy said "parent feel they are not qualified.But kinds learn most of their money lessons from their parents best. you just need to talk about it ."
Really it is not hard, expert agree, if you take step by step. The best way to introduce the concept of money managmeent is to give children some money to manage,said Janet Bodnar, author of world famous book "Raising Money Smart Kids". What is the advise of Bodnar?

Bodnar suggests setting a weekly allownace that equates to half the age of children at the rate of Rs 2/- for a four year old and Rs 5/- when a child hits 10 th year. According to me, for Indian parents there need not be any particular formula to be followed on the amount. Parent can simply shift some money that they were spending on him monthly for his toys and snacks and story books etc.- and allow them to decide how to spend it. The most important thing is for the children to see that manging money is all about making choices. If you buy one thing costly you would not have money to buy another. It is like teaching children about healthy eating.You donot force children to taste from food pyramid- arather you cook for them to experience it. Likewise parents need to make money experiences a part of their childrens living. Perhaps this would help children to realise the value of saving . Of course guardian has to be strict in allotment of amount to be paid .

N.R. Srinivasan, an astute acountant started giving his teen aged son Rs10/- a day and asked him to divide this allowance into three parts at the rate of Rs 3/- each for his T shirts,,CDs, Tiffins and balance one rupeee for daily saving for buying whatever he wants like an extra pair of shoes or shocks or a cap etc. The formula developed in him a sense of saving and developed respect for money value . In later years his son became an investmeent expert when he grew up after completing his MBA.

His friend Bibek Talukdar gave his young son Paban whatever he wanted. He even purchased a shoe costing Rs four thousand on demand, whereas he himself was wearing a shoe costing Rs 800 only. He never taught the valuee of money to his son. When his son , Paban was in the last year of the college he demanded from his father a Motor Cycle which was refused. He told his father if he was unable to meet his demand why did he gave birth to him. He threatned to commit suicide for loss of prestige in front of his classmates. .Ultimately father had to agree. Later years, his son became a vagabond. According to expert, it is the parents who can incuclaate the best money value in children's mind by his deed or by example.

In case parents do want their children to become money savvy then start their life with a simple piggy bank . This would develop the concept of "Spend, save and share" early in life.This concept should be started with the kids because most of them otherwise keep on harping and whining " give me , give me and give me" while visiting stores and exhibiton etc.

As the children reach adulescent they should be introduced to banking procedure and asoon as theeir pass out of the high school they need to be introduce to credit card system.The most of our boys after passing go to college other than at their own home town. This habit of credit card/Debit card would help them to mangement their fiance while in hostel. Parents can deposit money in his acccount in home town and he can take out money in the town where his college is situated in south India. or else where.

According to me,parents need to explain their teenaged children that money is a tool that provides both enjoyment and security when used wisely. Srinivasan oncce told mee that his grandfather grew up poor and was never able enjoy his money. He grew up affluent and lacked awareness of the cost and value of money in young age.He wants his son Hari to have respect for money but not love it too much nor fear it too much. A healthy attitude towards money would make his son a balanced human being-that is what is needed in life, he added.

All parents must remember the words of Einstein that the mystery of compounding of money is far more complex to him than the complexity of the laws of universe. Ask your four year old child to save Rs five per day in bank and ask him to count the sum when he is sixty years old. It would be difficult for him to count the number of zeros then.The recession is the best time for you to introduce the money management concept to your child for only then you can feel the real pinch and power of money.



Anonymous said...

Great post, I couldn't agree more from a parent point of view, and a childs' education point of view. As a single parent that was *less* than good with money throughout my youth, teaching children about money is CRUCIAL, in my mind. I’m not going to blame parents, schools, etc, but quite simply, I clearly “didn’t get it”, and I am still paying for those mistakes a decade later! And quite frankly, I hate the position I got myself in, everytime I pay off my past debts… I could have used my time/money sooooo much better.

A program was suggested to me by a friend, that teaches kids to be responsible with money, and puts them in control of their money. It’s a fun, interactive booklet + personal website that makes tracking their money fun – more importantly, the tugs on the pantleg going through the grocery checkout and the tantrums have all but disappeared! I guess that’s a little self centered of me… but any parent knows those situations all to well. For the record, I too used to do this to my parents, I was apparently horrible to bring into a store… oops!

If anyone is interested, the program is designed by KidsWealth: (hope it’s OK to post URL, I put it in my comment description to).

Just my .02c (no pun intended) !!

Bublee said...

Brilliant post. Couldnt agree more :)