Family’s Finances – Do we Share or Hide Them From Children?
Money is not a topic very widely discussed, especially in the Indian context and more so with children. Few couples have a fair idea of their spouse’s earnings and investments, and even fewer know the exact details.We perceive talking about money as being taboo.
In earlier generations, parents would shy away from discussing anything at all with children, possibly due to a belief that children are not mature enough to understand the issues of adulthood. With money, it was often the feeling that talking about financial insecurity would get the kids all worried about the future.
How many of us still feel this way?
Even in a bad month, we want our children to have the best of everything. If they’re used to a weekend restaurant hopping routine, we wouldn’t break it, even at the cost of overburdening our credit card.
Along with topics like sex that we also love to avoid, we never talk about money with our children and leave them to figure financials out on their own as they grow up.
Is this the right approach? I personally don’t think so. I think telling kids exactly how our financial situation is, prepares them to spend better and save better when they are adults.
My frame of reference in drawing this conclusion is admittedly my own experience and that of my cousins, but considering the sample size called ‘cousins’ is fairly large in my case, I think my observations hold water.
As kids growing up, some of us underwent a scenario of financial uncertainty. By the age of eight, I knew that we were well off, but that wouldn’t necessarily be true all the time- this was the bane of private sector jobs back in the nineties. I particularly remember an instance where I wanted to throw a huge birthday party for all my friends, and my father told me as plainly as possible that we wouldn’t be able to do so this year, because we didn’t have enough money. He had three credit cards, and one of them could easily help host a birthday, but he didn’t think of credit as his money. I don’t remember if I was disappointed about it at that point, but I do remember the lesson to this day- spend what you have, and no more.
I don’t remember if I was disappointed about it at that point, but I do remember the lesson to this day- spend what you have, and no more. Analyzing the spending habits of each of my cousins, it is easy to see why some of them go overboard, while others are more restrained.
Can you teach a preschooler about money?
The answer is yes!
Lessons in money are best learned with the very first piggy bank. Keep adding a few coins to it every now and then. Open it on a special occasion and tell them that they can buy whatever they want with their money. There are also some great books, that can help children understand more about money in a fun way.
For slightly older kids, practical knowledge that comes from visiting banks could be very helpful. You could even open an account for them, linked to yours. Once they are about ten, talk to them about where the money goes each month and why it is important to plan and save for a rainy day.
Most importantly, create a culture of communication around finances. Let them see you having discussions on finances with your partner, and make the conversations mature. If you’re making a financial commitment, explain the nuances to older kids- what you’re investing in and what you’re giving up to have it.
If there is a financial crunch that is making you insecure, your kids can benefit from knowing about it. You could spare them the harsh details if you wish, but ask them to be more mindful of their spending for a few days, thus encouraging them to contribute to the household in their own way. Whatever path you choose to take, make sure the lesson is imprinted in their minds. While it is every parent’s wish to protect their kids from harsh truths, sometimes staying quiet does more harm than good.
While it is every parent’s wish to protect their kids from harsh truths, sometimes staying quiet does more harm than good.