Apart from introducing children to the wonders of math and science, the Singaporean education system lays a lot of impetus on teaching children, as well as the parents, the importance of financial education. In fact, the parents are made to be a part of most such classes so that there is a three-way sync between them, their wards, and the teachers.
In India, Children’s Day is widely celebrated on the birth anniversary of Pandit Jawaharlal Nehru on November 14th, considering his fondness and affection for children. Considering this, what would be a better gift to the Indian children on this day than helping them become capable to handle their finances?
Let us take two cents from Singapore’s approach first!
How Singapore instills financial sense into kids
There are five basic lessons that Singaporean schools start imparting to children and parents at a very early stage.
· Give your children a weekly allowance and encourage them to save. The idea is to inculcate the habit of saving money at an early age.
· Children should know the difference between needs and wants. Encouraging children to spend on their needs first will help them prioritize in life. Also, encourage them to earn by incentivizing their help around the house.
· Teach them how to shop for groceries and other household items and how to compare prices. This will make them cost-conscious.
· Teaching them how to budget their expenses will help them control spending. Let them learn to use discounts and coupons effectively to shop economically.
· Encourage them to use cash and spend out of their earnings rather than their borrowings. It is hard to change if you get used to “free” money.
The Singaporean model is a lot more profound than it appears and addresses the root of the cause. Most often, parents in India allow their kids to treat money as an entitlement and this is exactly where such money lessons can come in handy.
This Children’s Day, how about giving your kids a Finance 101 lesson through these seven extremely popular quotes?
1. You got to tell your money what to do or it will leave you – Dave Ramsey
There is an old aphorism “A fool and his money are soon parted”, which has surely stood the test of time. With this in mind, show your kids the importance of keeping a check over their finances. Kids need to learn early on that managing money has to be active and not passive. Let every item of expenditure be planned, deliberated, and thought through.
2. Don’t make money your goal, but pursue your passion – Maya Angelou
A lot of young kids in India want to become a Bill Gates, a Warren Buffet, or a Jeff Bezos. What kids tend to miss out, however, is that for all these successful men and women, money was secondary to their passion. Bezos would have never been the richest man if his dream had not been to create the greatest e-commerce platform on Earth. Kids need to learn to define their passion and chase it. The money will follow as a by-product.
3. Investing is like watching grass grow or seeing paint dry – Paul Samuelson
Nothing builds wealth over longer periods of time than the virtue of patience. No speculator has created abundant wealth and no speculator has made a big difference. It is only when you put your money in the right investments and watch it grow for a long time that you see big returns. Children should use this philosophy when it comes to investing their time, money, and other resources.
4. Before you speak, listen; before you spend, earn – William Ward
The ideal financial education for a kid is to understand the priorities of money. The earlier you teach them that money is not an entitlement, the more successful they are likely to be. Like kids must be taught to listen more, they must also be taught the dignity of labor and the need to earn money at an early age.
5. Don’t spend money you didn’t earn to buy things you don’t need – Will Rogers
A lot of actual buying among children happens due to peer pressure these days. Be it a top-brand apparel, or the latest technology, or game in town, kids love to splurge on things they do not really need. This gives them a sense of entitlement, while inadvertently letting a lack of accountability creep in. Here is where a greater focus on budgeting will come in handy.
6. Each time you borrow money, you are robbing your future self – Nathan Morris
From the days of Polonius, debt has been a bad word. Children need to learn early on that borrowing in order to spend is never a great idea. If you can borrow and earn higher returns on the money, then it is okay. Growing up, children find plastic to be an easier way of paying because they do not really know what “credit” means. They need to know and understand the limitations and the downside risks of the same.
7. It is always better to make money the old-fashioned way – Malcolm Forbes
This will become a lot more relevant as your kids grow up. Most children take on college loans for higher studies. Watching other kids doing well in their careers when they themselves are struggling could easily lead them to adopt shortcuts to making money. But, as we have learned time and again, it is the old-fashioned way of making money that really works and pays off. And that only comes when children are taught the importance of diligence, hard work, and patience at an early age.
This Children’s Day, let us adopt a different approach to gifting to our kids the invaluable lesson of financial wisdom. They will surely be better off with it!