Yes, you read that right — I talk to my six-year-old about money. While she talks to me about her class curriculum that requires her to learn about the basics of currency, notes and coins, I take it as yet another opportunity to engage with her on a few basic personal finance concepts.
Now, she may be really young, but having conversations about money is not uncomfortable or unusual for either of us. This is because making her a financially independent and informed adult is one of my top parenting goals.
Here’s why I think it is so important:
Money will be an inevitable part of her life
The pace at which the world is changing, the focus is not on passing down what works today, but on enabling her to make decisions for herself tomorrow. Teaching about money is an effort in that direction: she will earn it, she will be forced to deal with it (spend, splurge, save — do something!) and will definitely struggle with a lot of ‘noise’ on the subject once she gets to it.
Teaching her the value of work
I’ve dealt with ‘working mom’s guilt’ for many years. But now, I take it as an opportunity to discuss the ‘value of work’ with my daughter and to teach her that earning money requires us to put in deliberate efforts. There is no shortcut to being wealthy or affording the lifestyle that we do.
To help her understand the sense of satisfaction which comes with earning your own money, we have started charting out 3 chores for her per week (mutually discussed and agreed upon). Basis this, she earns her weekly ‘income’. Even though we aren’t super-regular with this, it has given me a chance to discuss with her ‘action and reward’ and ‘happiness of doing your own work’.
*Also, as a rule these chores are not to be confused with getting paid to help around the house.
It’s okay to get nice stuff as long as it’s within a budget
Let’s accept it. My daughter’s generation is spoilt for choice. There are new dolls, legos, shopkins, num nums and a hot new ‘trending’ toy every week. This decision between what she needs and what she wants will only get harder for her. Working within a budget — today, one set by me, tomorrow it will be set by her — will give her a sense of clarity on what really is her definition of ‘value for money’. There is nothing confining, restraining or miserly about having a budget and living with it.
She has already started demonstrating her understanding of budget and value when I take her out shopping. I hear no tantrum, no excuse, no aggression when I refuse a high priced item. She has started negotiating with me on what her options are, what she really does not have and would like, and how much am I willing to spend. Sounds unbelievable, right?
The joy of delayed gratification — saving up for something special
Every financial advisor worth her salt knows that having a clearly defined goal makes all the difference in reaching it. Working towards a goal teaches us to delay our gratification today for something special tomorrow. Our kids need to see the benefits of holding on. Because they will always have the option of not needing to.
Once we set up the chores, the next step is to link the income with a goal for her. A hook that would keep her interested. Because she adores her dog-sister, I used her upcoming birthday as the perfect excuse. Together we looked up the perfect colorful ball as a gift, and defined how much was needed. I took up 50% of the spend — provided she put up her share of the deal. Voila! Two months later, slow but steady, my 6-year old made it happen!
She should have a healthy money story
Money is one of the least discussed topics within families today. This makes it seem complex, mysterious, uncomfortable. We all have our own money stories which are created when we saw our parents deal with money — sometimes through arguments or uneasy exchange of glances, or even worse, when it’s not discussed at all. As adults, this story defines our relationship with money. If we were deprived of things as kids, we could end up becoming indulgent shoppers, with a sense of ‘ I deserve this’. If we saw arguments because of it, we could have find it difficult to discuss money with our partner, treating it as a subject of conflict.
By sharing, discussing and ideating together, my attempt is for her to treat money simply as a tool to help lead the life which gives her joy and satisfaction. I want her to pass on the same story to the next generation.
It’s not easy being a parent, especially communicating about subjects which are alien to us as well. But being deliberate in our parenting, to prepare our kids to make decisions in a world we haven’t experienced, is the only real thing we can do.