Instilling money management in your child through upbringing
So teaching something to the tiny tots can be an arduous task in itself since it not only requires an extreme amount of patience to deal with the kids but also shaping their minds up at this formative stage has to be done extremely cautiously. Because whatever they are taught, they will pick exactly.
This stage of highest absorption power for the kids can be greatly used to their advantage as you can water down the tough concepts to the basics and root them into their minds. This can be achieved by shadowing the thing you want your kids to do, since kids love to copy.
Another way can be by using the Trojan Horse concept, hiding the lesson under the pretence of playing.
There is a common concept that the followers of Judaism are very good at finance/owning assets/money management because, even at the earliest stage of their lives, they are taught the concept, and this is infused in their daily learning. Rather than stereotyping or segregating the concept by religion, class, or any other differentiating factor, everyone should learn this concept.
The fact that money doesn’t grow on trees but that you have to earn it must be taught from the very beginning. Because we all know whenever we do something ourselves or when the push comes to shove, and we face the reality of something, only then can we truly appreciate the value of anything.
It can be anything in life. Hard-earned grades in a tough exam tend to give more satisfaction than easy A’s. In football, goals scored in tough situations are more lucrative than a penalty kick.
Similarly, when your kid works and toils for money as part of his or her education, s/he will understand the true value of money.
This can be done in several ways.
In movies, we see that in the western world, the kids/teens mow the lawn/clean the pools/clear up snow from the pavement/sell lemonade for money or pocket change. Even students babysit and work in restaurants, cafes, and libraries to cover their expenses, say, during their vacation.
Sadly, in Bangladesh, the concept of doing that is still taken with a grain of salt. Providing tuition is ok, but serving food at KFC, helping in Aagora, and providing ride shares through Pathao are looked down upon. But like any other predisposition, it has taken lots of time and participation from people to remove the bias associated with it.
Even if you did go to competitions for the prize money, it was never and still is not a good reason to earn money. Because the prize money came from one event only, it was not as if the money kept rolling in like a salary, so it was more of a one-time event than a continuous or sustainable one. With time, the scope to earn money increases manifold.
As for the kids, you can start with small things like paying them for running errands. Say your kid can press the clothes nicely, and give them a small token of money per dress. The balance has to be there; it cannot be just because they are your kids.
You give a big amount of unit payment because this is just a simulation of the actual world, and in the actual world, people will always try to cut down the cost. Just to make it more fun and realistic, you can even add penalties to it. Say if a dress is burned, even if it is an accident, you charge a hefty fine from their allowance.
This is a hard pill to swallow, but in turn, this will make the child more cautious and teach an important life lesson: nothing in the world comes for free, and there is no free lunch.
But beware, this cannot be done to the extent that the entire thing becomes money-centric because, chances are, that will take the humanity out of the child, and s/he might demand payment or compensation for the slightest amount of work or help.
Or even worse, humane events like donating blood or helping the poor—things like these might be nonexistent in their lives or might just be an event of indifference to them because there is no monetary benefit in them. These are expenses, to a degree.
This shows that there is a fine line between the two sides, and care should be taken while dealing with it.
Even the concept of the time value of money can be taught playfully. The basic aspects of investing and how to diversify your portfolio can be instilled in children from an early age.
Say if you want candy now, you will get one candy, but if you are ok with waiting for a certain amount of time and thus giving up your desire to have that candy now, you will get two candies. Small changes like these can help the money management learning process as well.
Like every other single issue, there are counterarguments to the concept of teaching money management to your kids as well. The most logical one is that when push comes to shove, those facing it will learn it out of necessity.
There are other factors, such as the concept that money is the root of all evil and that it is very impolite to talk about money. Still, those are attributed to social and cultural biases and norms, mostly in this part of South Asia.
The writer is a finance and economics enthusiast, trying to break into the immensely interesting world of finance.