Recently i attended B’day party of one of my friends 6 year old Daughter. One of the guest presented her Barbie gift hamper. She rejected the gift and said that she already has much better Barbie toy set. Everyone present at the party was zapped. The shocking conclusion is that at the age of 6 she does not care for even 2000 Rs worth gift set as she has easy access to everything. Its not her fault but her parents are at fault. They have not taught her Financial Discipline and everything is easily available at her finger tips. Welcome to the World of Consumerism.
Indian Society is changing and so as its values. Sometimes back i wrote an article on Kids Marketing. In co-relation to same, it is also critical to inculcate Financial Discipline among Children. Today Parents have all the money to spend but don’t have time to spend with Children. To overcome this guilt, Parents fulfill all the materialistic needs of a Child. Secondly, these days most of the couples have only 1 or max 2 kids. When we were kids, all my uncle & aunts had 3-4 kids so the disposable income was divided among 3 kids. Today entire disposable income is for 1 Kid only. By providing easy money to a child, Parents are not understanding that Kid will never realize the Importance of Money. To inculcate Financial Discipline, 1st the child need to understand the importance of money. To understand the importance of money, a child need to understand that money is not available easily.
Sometimes i wonder, how my parents managed to fulfill all the financial responsibilities with ease despite earning fraction of what i earn today. Answer is simple, by following strict financial discipline. They have not learnt Financial Discipline on their own but was taught by my Grand Parents.
Now, you must be wondering how to inculcate Financial Discipline among Kids. Just follow following simple steps
1. Learn to Earn:
It is important that parents should teach their child that there are NO FREE LUNCHES in this world. It should start with baby steps. Luxurious needs of a Child should be goal linked and they should be taught to EARN the same e.g. if a child demand video game then it should be linked to academic performance or linked to improvement of kid’s bad habit. Objective is that child should make some efforts to get video game, if it is easily available then he/she will not understand its importance & that of money.
2. Habit of Savings
Set “Savings target” for child from pocket money and always motivate child to achieve the same. As an incentive, keep X amount as Bonus from your end if child achieve the target. It will reiterate the fact that savings is good habit and is also rewarding. If a child want to buy bi-cycle then increase pocket money and motivate child to save for bi-cycle. If bi-cycle is bought from child’s saving then it will give sense of achievement and also motivate the child. Besides short term goals, one portion should be saved by child for long term goals i.e. future requirements 1 or 2 year down the line.
3. Confidence to Spend
Always encourage child to spend on their own (Only essential expenditure) e.g. encourage child to count & pay to Newspaper vendor, Milkman, Grocery Shopping etc. Besides saving, a child should also realize the importance of spending. Objective is to teach “How to handle money”. Savings is one part but spending is also equally important.
4. Learn to say “NO”:
Today’s generation can’t accept “NO”. It is fine in protective environment of home but what about outside world. I have not seen any parent saying NO to a kid for any of his/her demands. Side effect is that Kid will start taking parents for granted. Its a big hindrance to inculcate Financial Discipline in a child. It is important for parents to say NO atleast 4 times out of 10 times. It will help child to bear patience and disciplined.
5. Importance of Money
Last but not the least irrespective how well off the parents are, it is critical to teach a child that “How difficult it is to earn the money”. It will help the child to become self-dependent. I have seen in so many cases that children are dependent on their parents wealth and think that they don’t need to do anything in life. A child should understand and acknowledge that Money is very hard to earn & should be spent very carefully.
I hope these points will be helpful in inculcating Financial Discipline in your child and he/she will become responsible citizen tomorrow. Financial Discipline should not be enforced but it should be a Habit.
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