Aarti Tibrewala Darooka
A chartered accountant and MBA, Aarti is an entrepreneur and financial literacy advocate. She has over 15 years of combined experience in the consulting, advisory and travel industries. A national ranker in CA, Aarti is a published author, who has written a plethora of books for children’s financial education and is currently helping build awareness for financial literacy for women through her platform, Sthreedhan.
Rachana is a consulting physician. She works at multiple clinics and is a single mom. She makes a good amount of money through her practice and has been saving it diligently, investing in a variety of options with the help of her father-in-law and a financial advisor. Lately, she has observed that her pre-teen daughter has developed a reckless attitude towards money and has not been valuing the things that her mother works hard to provide her as also the opportunities that she has been getting which ideally, she should be doing all she can to grab! Rachana is unsure of how to broach the topic and seeks advice from some of her friends who have older children.
Rachana receives many good pointers from her well-wishers about how to explain the concepts of money and value to her child.
Rachana’s sister advises her to stop worrying about the problem. She says that it is part of growing up for all children, who have a certain frame of reference and obviously take what they were born into for granted. It is the parents’ responsibility to help the child gain context of what level of privilege they were born with – the home they live in, the food they eat, the clothes they wear, the school they go to and the lifestyle they lead – where all of that comes from! A cactus is born in the desert, it does not know otherwise. A lily grows in the pond, it does not know otherwise. Similarly, the child knows what it was born into and not otherwise.
Rachana’s colleague shares what she did to help introduce conversation around money with her child. She first helped her child understand what money means. While for children, money is basically a means that helps them gain what they want – an ice cream, a chocolate or even a photocopy from the stationery store nearby, they should know that it is a definite concept. Money is something that gives them the ability to pay for things and services. It is what we need to take from others the things that we do not have. If we want something from someone who is not our family or friend, we need to give them something in return. That something is money.
Then she went on to explain that money is controlled by the government of the country. They not only print the notes and mint the coins, they also help decide the value of the money. For example, if the value of the money of your country is high, you will be able to buy more things for a single unit of that money. If the value of money of your country is lower, you will need more money to buy the same thing. The different moneys of different countries are called their currencies.
After this, the child also needs to understand from where money comes. The fact that money needs to be earned and is not received needs to be explained to a child in the same level of simplicity as a person having to eat to gain sustenance. Many-a-time, children take for granted the fact that there is money. It is important to give them positive recognition of the work-reward nature of life. They need to understand that unless their parents work, they cannot have money. If there is some money that has been passed down from generation to generation, unless it is supplemented with further income, like the water in their school bottles, that money will also run out. Therefore, like we give people money for things we need, people give us money for the work we do.
Then it is important to explain the concept of need versus want. If a person spends all the money he has on the things he wants rather than the things that he needs, he may not be left for things that he necessarily needs. This can again be explained with the example of the water bottle. If you use the water in the bottle your mother gave you for school to water the plants in the school garden, you will not have enough water to drink till the time you reach home. While you can refill the bottle from the school water dispenser, it will require extra effort. So the sensible thing to do would be to wisely use your resources.
As children grow, not only do they need to understand money, need and want, they need to be taught the concept of value. What is the concept of value? You can buy a simple lead pencil for Rs.5 in the shop. It will write well enough for you to complete your school work. The shop may have a more expensive pencil with some kind of jazzy features like a cap, brighter colours, etc. that is priced at Rs.20 each. Now, if both pencils can be used to write maximum of 8 pages in your notebook, they provide the same value. For Rs.20, you can get 4 such pencils. So what is the value that the expensive pencil provides? At the same time, for your art work in class, you are required to use a special charcoal pencil which comes for Rs.18 each. To get the effect that your teacher is teaching you, you have to use a charcoal pencil only. This pencil gives you a special value that the normal pencil cannot provide. It is mandatory if you are to learn the new art technique properly. This teaches you the concept of price versus value.
Children don’t need to think about money all the time. What they need to do is appreciate its value and over a period of time, learn about it like they would learn to ride a bicycle, swim or even cook. One of the best skills you can give your child is to prepare them to responsible, empowered adults around money. After all, as Maria Montessori said, "The greatest gifts you can give your children are the roots of responsibility and the wings of independence".