I work all night, I work all day, to pay the bills I have to pay / Ain’t it sad / And still there never seems to be a single penny left for me / That’s too bad
— “Money, Money, Money” by ABBA
Whether you are rich or poor – money matters. For millions of people in India, there is just not enough money – to spend, to share, to save. The recent article in The Economist highlights how the great Indian middle class, slowly rising above the poverty line, just doesn’t have enough money to fulfil its dreams and aspirations. Teaching children about saving, spending and sharing; giving them skills to plan, make choices, and differentiate between needs and wants could be a good way to address multi-dimensional poverty. And that learning needs to start in the early years when their brain cells are making more than 1million neuron connections per second, wiring their brains – and habits – for life.
Parents are powerful role models to help children understand concepts like spending, saving and sharing. But research reveals that many parents resist talking to young kids about money for many reasons. They may be psychological (why put unnecessary pressure on children?), social (what will people think?), age-linked (they are too young), or philosophical (children shouldn’t see the world in terms of rich or poor).
Basic financial skills are closely linked to something called executive function. It’s a cognitive ability described by some as the ‘CEO of the brain’ and it develops rapidly during early childhood. Executive function allows us to set goals, plan and get things done. It is responsible for a number of skills, including: paying attention; organizing, planning and prioritizing; starting tasks and staying focused to complete them; regulating emotions and self-monitoring. These all have a direct bearing on financial empowerment; you have to be able to plan and self-monitor in order to set and adhere to a budget.
Teaching children at an early age how to plan, budget, spend and save are important lessons that strengthen their development of executive function and stand them in good stead throughout their lives. Children should be introduced to concepts like debt, accounting, credit and money management early on in fun and playful ways.
Children can be encouraged to have a money goal. It may be as simple as buying a pencil box for themselves, or a more expensive item, like a computer. Formulate a plan with a goal for a month, six months, or a year and chart the progress as they move along.
Children learn best by practice. When given a sum of money to manage every month and held responsible for a small set of expenses with that money, they soon learn to stretch their money.
School is another place where money management can be taught, and while money lessons feature to a small extent in classrooms, they need to percolate much deeper. Yet I am pleased to know that, in an age when children increasingly struggle to distinguish between wants and needs, books on money are beginning to find their way into schools.
There is a neat four-book series by Pratham books, written by Mala Kumar, that demystifies money for children. It explains what money means, where it comes from, how it grows, how it travels, what are the things you can (and should) do with it, and what you can’t (and shouldn’t). It also describes investments, savings and other monetary avatars and tells you how to protect money. A valuable read, indeed.
And programs like Sesame Workshop’s Dream.Save.Do help children understand the basics of financial empowerment: setting goals, planning, making choices and delayed gratification.
Saving money is not just about money. It’s also about resources – food, water, electricity, and all the other natural and manmade resources we are constantly depleting and need to conserve. Any resource saved is ultimately money saved.
As children grow up, they will eventually handle money. They may take wise decisions, they may make mistakes, too. But it is worth educating them young. It helps them become well-informed decision-makers of tomorrow.
