Importance of Financial Literacy in Children and Youth: Our Story


I recently read an article about how lending to unemployed students to purchase mobiles, laptops etc. is on a rise. The article spoke about how student lending companies are springing up.

The millennials are being seasoned to take on credit before they completely understand the concept of loan servicing, credit rating, savings etc. Before they have means to service their loans credit is being made available to them. Instead of being nudged to save before hey make their spending decision, availability of credit compels them to act on their attraction for that shiny Iphone.

For a couple or reasons I find this very alarming. Being a mother of a 6 year old who will be the target audience for these credit companies in another decade (Khuda na karein, though) I feel very strongly about financial literacy for kids.

Firstly financial literacy in our country among children and youth has been low. Children and even youth have always been excluded from the family financial discussions and decisions. But now kids are able to take financial decision without understanding basic financial concepts. Moreover the consent of their guardians/parents isn’t necessary. Even if consent was necessary it wouldn’t provide much comfort as only less that 30% of adult Indian’s are financially literate as per a Standard and Poor’s survey.

Secondly instead of the youth saving for their needs they are being lured to spend impulsively on luxury. As a mother I would prefer my child to weigh her spending decision, save money for the same, spend on experiences rather than things etc.

Lastly, though credit provides a boost to the economy during an economic boom, it can be devastating during recession, College pass outs may not find a job because of which they may go into default. This could ruin their credit rating which can impact their ability to take loans in the future. During a boom their may be a tendency to take on consumer loans for luxury and developing bad spending habits.

The above reasons compelled me to start a parenting experiment with allowance vs. pocket money. Which on the onset I must tell you, didn’t go too well.

One evening I told Zayb that if she helps pick her toys and clean the hall in the evening she will receive Rs. 10, which we can place in a glass jar so she can track her progress. At the end of a quarter she will have enough money to buy a new toy.

Her immediate response was ‘Dadi gives me money and buys me toys without asking me to do anything.’ There goes my plan I thought. Somehow managed to cross the bridge of this very innocent yet valid argument.

So our daily, end of day routine started a few months ago which required her to clean the hall and put her toys away. This went well for a few days. But on certain days when she was tired or cranky or both or just plain simple rebellious she would refuse to do her chores and was OK to forgo her allowance.

This was quiet alarming. In the quest of trying to teach her the value of money, help her identify her purchasing goals and help her save for her goals, I was teaching her that she gets PAID for being family. Instead of telling her she should do the chores because she is family, and her help matters, I was telling her that I will pay her for the work she does to help out around the home she lives in. Instead of teaching her the importance of keeping her home and surroundings clean I was bribing her into helping me. As a result I would always be dependent on her decision to take the bribe or decline to help out.

I haven’t yet decided by new approach on teaching her about finances, though it’s on my mind as my next parenting project.

Also what this experiment did teach me was that even with the right intention and a lot of thought and research a parent is not always bound to take the right decision. Hence we always have to be open to changing our approach.


 Image Source: http://www.scarymommy.com/having-children-saves-you-money/ 

This post is published for #OpenNTalk Blogger’s League hosted by @GleefulBlogger and @WigglingPen in association with SummerbarnVedantika Herbals, NyassaExplore Kids World.  
#Bloggingdivas  

Comments

  1. that's so true one should know the value of money ..need to teach children's on time..
    #opentalk
    #bloggingdivas

    ReplyDelete
  2. this is so imp, in fact we also started financial planning with my elder one, i give some money every week to my son and encourage him to save him.
    - Princy from #InvincibleGang for #OpenNTalk #Week3

    ReplyDelete
    Replies
    1. this seems to be the right approach. Im devising a revised plan.

      Delete
  3. I think granny's somehow spoil things too, but they end up raismg us perfectly right?
    Like my mom will ask me to not be strict. But I recall how she was:)

    Nice name Zayb
    #OpenNTalk #BlogAMile

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    Replies
    1. 'Thanks Zaynab. Yes. its true though grandparents a re a huge help. they also add a lot of complexity to parenting. My daughters'names are Zayb Aiyra and Zaryaab Ahd.
      #Bloggindivas for #OpeNTalk

      Delete
  4. Very true it is so difficult to teach kids value of money and yet not teach them that they will not be paid for household chores. It is their duty to do their own little chores around at home.#NISSATalks

    ReplyDelete
    Replies
    1. True. Im going change my approach. but you can never tell what will work and till when
      #Bloggingdivas for #OpeNTalk

      Delete
  5. Really, this is alarming. You know, I am working for last 7 yrs but I dont use credit cards still. I get many calls from the companies but I reject all. Kids should understand the value of money and they should learn how to save money for future. I have given my 3yrs old kid, a piggy bank. I have asked him to save money there just to improve his habit. #BloggerBabes #OpeNTalk

    ReplyDelete
    Replies
    1. Me neither. i do not have a cc too. Inch pinch
      #Bloggingdivas for #OpeNTalk

      Delete
  6. This is an eye opening message. I am glad you have initiate such a great idea. Everyone should start doing this. #BloggerBabes #OpenNTalk

    ReplyDelete
    Replies
    1. Thanks. Appreciate your comment
      #Bloggingdivas for #OpeNTalk

      Delete
  7. This is an eye opening message. I am glad you have initiate such a great idea. Everyone should start doing this. #BloggerBabes #OpenNTalk

    ReplyDelete
    Replies
    1. Thanks. Appreciate your comment
      #Bloggingdivas for #OpeNTalk

      Delete
  8. Yes, inculcating a sense of responsibility early in life so far as money is concerned, is vital. Nice post that must be read by many. Just two concerns: Please do a spell-check and try to avoid using images from search engines. One of the articles published this week in #OpenNTalk does mention this and specifies that such blogposts are ranked lower in search.

    Arvind Passey
    www.passey.info

    #NISSATalks #OPenNTalk

    ReplyDelete
    Replies
    1. Oh. Thanks for the tip. Didn't realize i had spelling errors. Thanks much appreciated.
      #Bloggingdivas for #OpeNTalk

      Delete
  9. I've considered teaching my son the habit of saving by offering financial rewards like you did and encouraging him to stash them for later. Your argument is true, we cannot make them feel like they're getting paid for being family. Will look out for what solution you found for this.
    #OpenNTalk #BloggerBabes

    ReplyDelete
    Replies
    1. Yes. I agree. I have to find another approach soon. Perhaps a pretend play bank.
      #Bloggingdivas for #OpeNTalk

      Delete
  10. Haahah kinda funny coz you had a hard time in conveying her the whole thing and bribe. But trust me this is a serious topic and should be taken into consideration by every parent. Love the way to approached her and to some extent she learnt the importance although she's a kid to understand the importance of financial literacy . This was like the best thing I came across today #OpenNTalk #InvincibleGang

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    Replies
    1. Thanks so much Yogeeta. This is a topic that really worries me. Im going to try another approach.
      #Bloggingdivas for#OpeNTalk

      Delete
  11. I agree Zeffirra. Kids must be taught about finances from the starting. Its easier said than done but its important they know the concept of saving, profit and loss etc. The statts you showed are quite alarming but as parents we can try to teach our kids s it will be beneficial for them in the long run.

    ReplyDelete
    Replies
    1. Thanks for your comment. Yes I agree.
      #Bloggingdivas for #OpeNTalk

      Delete
  12. Thanks for discussing importance of financial literacy right from childhood. #OpenNtalk

    #CrossBorderSisters

    ReplyDelete
    Replies
    1. Pleasure. Thanks for your comment.
      #Bloggingdivas for #OpeNTalk

      Delete
  13. Your intentions were clear to teach her financial literacy but the approach you chose was wrong as you admitted and been an experienced Mom, I say, never bribe kids for doing household chores or helping you, because unconsciously, they will always be in expectation as it will be inculcated in their habit. Allot them weekly pocket money and just watch how they fare with it. My kids used to save from their weekly pocket money and carried forward for next week and they never went bankrupt. :P Kids are more intelligent, my experience with my kids says.
    #BlogAMile #OpenNTalk

    ReplyDelete
    Replies
    1. I agree. thanks for your comment
      #Bloggingdivas for #OpeNTalk

      Delete

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