Cash Call

Teaching kids about spending

We recently went on a holiday with some friends whose eight-year-old daughter was familiar with spreadsheets and knew how to read the opening and closing values of stocks and shares. Shes a regular kid,but her stockbroker dad has already familiarised her with the basic concepts of spending,saving and investing. She knew enough to make a lot of adults feel woefully inadequate; I still dont know how to read a balance sheet and words like credit,tax and interest make my eyes glaze over and my brain go blank. When I see anything as daunting as a bank statement,my first instinct is to leave it unopened in a drawer,hoping fervently that somehow,itll disappear. I suspect that like me,many adults need a crash course in managing money. Everyones so caught up in the business of life,few of us are getting our money to work for us,not realising the benefits of compound interest.

How do we teach our children about money? The way kids want stuff,sometimes one has to wonder,maybe they actually think it grows on trees. Theres peer pressure to have the same toys other kids have and the lure of countless goodies at the mall. Kids in cities are learning about conspicuous consumption much faster than we ever did,thanks,in part,to our own questionable spending habits. Ive

often thought that a school curriculum should also include a basic financial literacy course. Its all very well to study Hamlet and photosynthesis but practical life lessons will get you a lot further.

A random poll conducted by an American finance company among adults between the ages of 23 and 28 found that a lot of people regretted that no one taught them finance basics. A sound understanding of money is an invaluable lesson for a child to understand that they have to live within their means,all their lives. Adults practise self control more easily If you like five shirts,youll pick one that you like best,or postpone buying it if youve already splurged on a new phone. Children need to be taught about delayed gratification or at least about smart purchases with lasting value. I find that kids who get pocket money tend to spend it on cola and chips and a whole lot of artery clogging food items they should not be eating. Teenagers,Im told,spend everything on video games and internet plans and cellphone bills. Nothing is saved for a big purchase,later,because no ones emphasising on long-term savings.

Of course,everyone grows up and eventually learns,but as Robert Kiyosaki says in his overtly simplistic but extremely readable Rich Dad Poor Dad,financial independence can only come from increasing your financial intelligence. Emphasising entrepreneurship and risk taking,Kiyosaki stated somewhat prophetically in his book that home values dont always go up and warned against counting your house as an asset. He questions why were not raising street smart kids wholl do their own thing and why the educational system is wholly geared towards creating employees. His best tip you are the biggest financial influence in your childs life. What they learn about handling money,will come from how they see you handling your own.

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Children