In this article, we’ll discuss 10 financial literacy mistakes which you have to avoid, when teaching your kids about money.
Birthing and raising a child is no joke (which if you’re here, you’re probably already familiar with). Though amidst their cute faces and reactions, silly questions and behaviour it seems bearable.
But that’s only until the questions are silly. When they start questioning about taxes, savings, expenses, money or any other word they probably picked up from some of your conversations, it isn’t just fun and game anymore. Because this stuff, it’s important and hence, it’s even more important to teach them right.
While every set of parents may have their own ways of introducing financial literacy to their children, the mistakes most make are common. Yes, you’re not alone, it’s only natural and very okay to be confused, stumble or make mistakes especially when it’s making the little ones understand such big concepts.
These mistakes are small minute everyday actions, usually out of habit of looking out for your kids or simply a case of ‘didn’t think of it that way’.
But what if YOU can avoid these mistakes?
This written piece identifies and walks you through the 10 mistakes that must be avoided when it comes to your child’s financial literacy journey, and potentially make it smoother.
- No, they’re not too young for this
- Out of school’s syllabus
- Let them ‘Earn’ money
- Give them Salaries
- Share the title of decision maker
- Using the weapon of force
- “Yeh bachhon ki baatein nahi hain”
- Take them shopping!
- The game of (Credit & Debit) Cards
- Lessons of Generosity
No, they’re not too young to learn financial literacy topics
We’re aware finances are no simple thing. It’s complex and goes beyond than give and take of money.
And one of the biggest concerns that trouble parents is how to break down these complex words and concepts to their children, because you know they are just kids. But no they are not too young for this.
Since the concepts are tricky and complex, it makes it even more important for the child to get familiar with them at a young stage. And essentially financial literacy is not the end, dealing with money correctly is a habit that needs to be imbibed.
They need to grow with them and practice them on an everyday basis, of course under your guidance –for them to be able to march forward independently.
Out of school’s syllabus
Some things, many actually, are learnt out of the walls of the classroom and money’s one of them.
Teachers and syllabus, books and notes can’t ‘teach’ money to kids, it’s something they experience and learn on an everyday basis, best beginning with the household scenario.
As parents, one must realise child’s financial literacy as their own responsibility and not leave it out for the school to cover.
Let them ‘earn’ money
We know money doesn’t grow on trees, but unfortunately, you as parents providing for them throughout their prime learning years can create a different impression.
In the attempt to give them the absolute best, we often offer them money whenever they ask. Since they get it so easily and the following instant gratification, the idea of ‘earning’ money gets disabled.
This issue can be fought by associating these little pocket moneys with daily or even menial tasks, and having them earn them. This will make them understand that it takes efforts and hard work to earn money and more realistically it won’t come as easy.
A fun fact, you can begin this exercise as early as when they are toddlers! The tasks could be as simple as putting back the toys and instead of money it could be something of their taste and liking.
Give them Salaries
As previously mentioned, financial literacy easily best begins in the household scenario. Household chores are another thing we ought to teach the kids –it’s not just a person’s job, everyone’s gotta do their part.
Paying them salaries for basic household chores could be a great idea for this dual learning.
Whilst at it, it must be made sure that they must not think of household chores as something that’s to be done for the money.
Household chores are one’s responsibility, and using them as instruments for learning should not make them think of it as otherwise. Because they won’t get paid for it, and should and will have to, in future, do them anyway.
Share the title of ‘Decision Maker’
In a typical brown household often the elders are the decision makers for the family. But when it comes to money decisions of the child, of course after a certain age and maturity, it’s not too bad to let them take the lead.
Making financial decisions for them hinders their ability to make these decisions on their own, which is a mandatory skill that they’ll inevitably need to master in the future.
Agreed that it’s rather risky to have the child make money decisions, but these don’t have to be big or important ones. Starting as small as involving them in buying their own toys could do the bit.
Using the weapon of force
Force is never the right weapon to teach the child anything and concepts and practices of spending, savings and more are no exceptions.
If anything, forcing only makes the child head in the opposite direction! You telling them to do something that they don’t want to, will only birth hatred and disliking towards it, which isn’t the goal. It’s essential to cultivate and develop their natural interest and will towards the matters of money.
“Yeh bachhon ki baatein nahi hain” (Biggest mistake in financial training)
“Yeh bade logon ki baat hai” “yeh bachhon ki matlab ki baat nahi hai, tum jaake khelo” Familiar right?
These dialogues must have been thrown around at you by your parents at least once and you too must have used them with your kids at some point of time. But let’s have a deeper look at them and their consequences.
Often when tangled in a busy situation relating to money or even in everyday use, parents tend to postpone, settle or avoid children’s questions and curiosity by giving this reasoning.
This in turn messages the children that money isn’t something they should pay attention to or learn at that point of time. This perception and delayed financial understanding eventually makes the later years harder for them.
The better way? Involve them in everyday money matters, take time to make them learn it according to their understanding. And if caught up in the moment, excusing yourself for the time makes for a better choice than giving a wrong message.
Take them shopping!
This isn’t how it sounds! Shopping acts as a great experience for the children to see money exchange, value and decisions happen first hand.
Different ways of learning work for different kids and usually typical sit down theoretical teaching barely works for any. But shopping –that’s always fun! It makes it easy to tempt the child and have them interested in learning money.
They potentially learn the concepts of worth and value, and understand mindful spending, budget, modes of payments and more.
The game of (Credit & Debit) Cards
No doubt that cash is only anymore a tiny part of money. Credit debit cards, netbanking, digital payments, wallets and more are the today and tomorrow.
While these are a little advanced aspects of financial learning, they too must be introduced to the child as soon as viable. Each of these are different, and have their own respective features, uses, pros and cons and safety barriers, and which must be explained to the kids as fit.
Taking the example of credit cards, it’s not the case of owning money, instead involves borrowing, debt, repayment and interests.
These are tricky topics and gaining understanding about them could help avoid and dodge potential financial problems.
Lessons of Generosity
Money unfortunately runs the world and it can be hard yet being very important to maintain an ethical outlook towards it.
Since greed and selfishness comes rather easy with money, it’s a duty to ingrain the ideologies of charity and ’sharing is caring’ in the children. Being born in a well-off family isn’t ever a made choice, but acknowledging the very fact, understanding the privilege, sharing and helping those in need is a very integral value and children must be taught the same.
Only the right mind-set can make the money be of any good.
Starting early and right is the key to building a rock-solid foundation and the way to secure your child’s future. These are no special, instead very everyday points and may not seem significant enough to be called ‘mistakes’ but when avoided, can actually create a significant difference in your child’s life.