Dear Parents, Talk To Your Kids About Money 

A couple of months ago, a father-son duo became the subject of a heated debate during a dinner party. A friend laughingly brought up the 6-year-old kid from Michigan who had spent over $1,000 (Rs 80,000 approx.) in ordering up a storm from a food delivery app while using his father’s phone to play games. 

The boy’s antics made news around the world. Innocent kids doing strange-but-mostly-harmless things with technology is entertaining for most of us. 

The food delivery app offered the family a $1,000 gift coupon so the story ended well for this family. 

But it doesn’t, for everyone. 

Start typing ‘kid spends…’ and search engines will give you a laundry list of autocomplete predictions centred around kids spending hundreds and thousands of dollars in in-app purchases while playing games or ordering all kinds of things on the internet without their parents’ knowledge. Imagine being the parent who gets blindsided by a credit card bill that runs into thousands in charges you can no longer contest.

While these stories make for good anecdotes, its also worth asking: are these incidents not scary proof of how terribly uninformed kids are about money? 

It might not seem like a big deal in childhood, when the stakes are low and money mistakes are mostly harmless. But when parents are reluctant to talk to our kids about money, it ends up having a ripple effect that ends in the country churning out generations of fumbling adults that go through life looking at money as something to be afraid of, instead of a tool that can help them lead more secure lives that they, not market forces or trends, control. This reluctance is the reason why only 27 per cent of Indian adults can be considered financially literate, according to RBI (Reserve Bank of India) data. 

One of the most common misconceptions around money and kids is this: So many parents believe that as long as their kids understand spending, saving, and budgeting, they will be financially secure. That’s partially true – kids who understand these three fundamentals of money are likely to live prudently and build nest eggs and emergency funds for life’s many curveballs. 

As a father and the head of a  financial literacy vertical, it is not enough to just create financial security for kids. Every parent needs to equip their kids to be financially successful and free.

Kids start absorbing their parents’ attitudes about money from a young age - as early as even 4-5 years old, and keep learning through observation through their teens and adulthood. Which is why, as parents, it is important to break the cycle of financial fear that may be passed down to the next generation.

And it all starts with conversations – about mistakes made, lessons learned, and how our own ideas about money have evolved. 

Many parents believe that their kids are learning to be financially smart through financial literacy programmes so they don’t need to address the topic at home. That’s not true.

Money is such a deeply personal issue, with so much generational baggage attached to it, that it is impossible to completely outsource the teaching. 

The great things about learning a new skill is, it’s never too late to start, although it’s best to start early. Starting at a young age means there is no need to break down conditioning or unlearn faulty habits/belief systems around money. 

Sure, kids can be taught how money works locally and globally, how different financial systems around the world talk to each other, how markets, demand, supply, and pricing of goods and services work, about the rise of digital money, and the jackpot – how their wealth can be put to work to generate more wealth. But for these lessons to be effective, parents too have to do their part by engaging in constant dialogue about their own financial experiences – the good, the bad, and the avoidable. Dialogues that are focussed on both sharing honestly and listening. 

I recently spoke to my daughter about why we have X car instead of Y, even though we can easily afford Y. It ended up becoming a long conversation about family stories and their influence on us, why her mother and I prioritise some expenses over others, how those priorities impact the choices we make around investing and lifestyle, and emphasising that ours is just one viewpoint – there are a million others, and as she grows, she will have the freedom to decide what’s important to her. 

Doing this work, financial literacy has been a part of my daughter’s life from the time she was a toddler. But these stories, combined with the most current financial knowledge by certified experts, are what make her see money as a real, exciting, life-changing tool that she has the power to wield to achieve financial success.

Bhavishya Chaurasia

Guest Author The author is the Co-founder of FinCHAMPS by BrightCHAMPS