Years ago, when our kids were young, we devised a plan that worked quite well. We allocated a specific budget for the program the child could attend, and allowed them to decide. For example, we offered a budget for a birthday party. The child can plan out every detail after accepting that the budget will not be revised. Kids loved the idea of ​​making decisions and being in charge of an important event.
The lesson was priceless. They had to choose their clothes, chocolates, cakes, furnishings and decide on each one keeping accounts. As parents, we still swiped the card, but the child knew every step. Buying another shoe means less money for the party, or Expense The return on decorations meant less money for gifts, while saving mom the money spent on packaged foods to make cakes and cook some dishes. The kids could see how to allocate the money and why they couldn’t have it all.
The lesson that has stayed with them to this day is that having more money to spend does not solve the problem. This is an important life lesson to be learned. Even with a big budget, friends had to make decisions about whether to take them to a movie or a theme park. We insisted that children choose this option. It was interesting how he thought about spending on himself and on others; spending on goods versus experiences; Spending on momentary joys or lasting gifts. He learned and grew up making better choices with each passing year.
Soon the sport began to expand to other family activities such as eating out, taking a break, etc. The kids soon started surprising and delighting us by opting to spend the whole day trekking and eating packed lunches from home and out to the movies. He had other plans for the money at the time and chose what he thought was fun. We were soon renting bikes to our vacation spots instead of traveling; We were assembling a fancy brunch instead of eating out; And we ended up buying museum admission tickets and watching the play instead of adding another destination to the itinerary. Children are highly capable of making sensible decisions if they are in charge. Other lessons were equally important.
From throwing tantrums and making demands, they were now learning to negotiate and stand their ground. They had to discuss among themselves and reach a consensus, and then convince us that their plan was the best use of the money that we had allocated for an activity. From a basic conversation of argument and persuasion, they understood that they would have to argue for the merits of their decisions. For us as parents, this was the most satisfying result of this experiment.
There were tears, anger, frustration and tremors even after going about these activities. He was barely eight and 10 years old when we started, but he turned into the habit beautifully. Today, as young adults, when they talk about these experiments, they bring forth benefits that we never imagined. Collaboration is a major lesson, my son told us recently.
He said the school system is so focused on individual excellence that along with the race for the top comes competition, jealousy and anxiety. Real life involves a lot of collaboration at every level. You have to consider the preferences and perspectives of others when interacting your way in the real world – with partners, friends, neighbors, co-workers, etc. The money game helped him to seriously consider alternative perspectives and give where it was. needed to make a decision. That was a major life lesson, he said.
We view learning as a serious formal activity. Whenever I talk to parents about money, they immediately ask for a course and think that the child should know the terminology and procedures, or that they should deal with institutions like banks. Some insist that the child keep track of his expenses. Good education is mostly easy. When we connect the points of our mind with our understanding of how things work, it remains. There are so many nuanced aspects of vast learning hidden in experiences that a curriculum will fail to capture.
One year, my daughter decided that she would not have a party, but would spend her birthday getting clothes and books to be distributed among the less privileged children at the neighborhood school. He also rejected the idea of ​​giving them chocolates as too vain. Children are capable of so much empathy and generosity if you let them be in charge of your life, without any nudges and making decisions for them all the time.
I am regularly asked about money lessons. We can create a curriculum and teach kids about bank accounts, Credit Card, Loans, EMIs and Investments, but nothing will be retained without putting in mind to solve a real life problem. Most of our childhood math and science lessons have been lost to us as adults because we didn’t have the opportunity to reference and apply. Money lessons are best retained if the context is presented side by side. I could have written a column about fixed vs floating rate mortgages, but you would care about it only if you are taking a home loan and you have to make that decision. Otherwise, it will be read and forgotten.
Children observe and learn how to make decisions in the home. Include them in the choices you make. Allow them to choose. They will enjoy the process. In this day of limited conversation at home, find new grounds for discussion. Children bring a new perspective and will amaze you with their abilities in making decisions.
(The author is chairperson, Center for Investment Education and Learning.)