Let us talk about money
TLDR: Talking money with your kids
I don’t know about you but I do not remember any conversations about money with my parents when I was a kid. The earliest I remember talking about money with my Dad was when I was 16 or 17.
We (both me and my wife) are from very modest backgrounds. Our parents were living pay check to pay check with almost zero savings, minimal contingencies and retirement planning. But they did instil the importance of a good education to make something of ourselves. Back in the day that meant studying to become a doctor or engineer.
Becoming a doctor was more difficult for few reasons
Very limited seats
Cost of education
Absolute necessity to do a Post Graduation (PG)
Long time to join the work force
Given the IT boom in India when I was getting out of school, engineering was the logical choice of education to be quickly employed provided you pass out with decent marks from a good enough college. So Engineering it was for me.
All through my childhood, I was aware that we were from a middle class household but my parents made sure that all of my limited wants and needs were always fulfilled. There never talked about their money problems or how hard they had to work, the extra hours during the week and during weekends that they had to put in to provide for me and my sibling.
My dad used to leave for work at 6:45 am in the morning and come back home at 8:45 pm in the night after his OT (overtime) 6 days a week, going to work on his faithful bicycle to the factory.
Sunday is his only day off to go grocery shopping, takes us out to the beach, meet the extended family and friends and everything else that needed to be done. My mom handled the household, cooking, cleaning, take care of us kids, teaching and tutoring us.
They never really had any days off and they never complained.
They did the best they could with the limited resources that they had at their disposal and I am forever grateful to them for that. If I am able to do half of what they managed to do for me then I would consider myself a successful parent. They probably never had a reason to talk about money with us kids when we were growing up because
Kids back then had limited exposure
No internet, no amazon, no online deliveries
No international holidays
No comparison between kids on birthday parties and size of cars
Kids these days have a lot more things to worry about compared to the previous generation. They are constantly bombarded with messages of consumption, immediacy of instant gratification, the 1 day delivery promise of Amazon, so on and so forth.
Kids who can delay gratification (The marshmallow test) have proven to be more resilient and turn into adults who are more successful.
So it is important to talk about money to kids, have age appropriate conversations with them.
Setup a children’s savings account in the bank.
Create piggy banks with - Spend, Save, Give and Invest boxes
Assign chores to them and pay them commissions
If you are planning to buy toys or other gifts for them, give them the money and let me decide on how to spend it
Discuss about your salary, your expenses, budgets
For older kids, bring in topics around investing, compound interest, mutual funds, equity markets etc.
Engage them in vacation planning, costing of activities, flight tickets and hotels
Learn to say No
As much as we all love our kids, we need to take steps to make them resilient, give them to tools so that they can become successful adults. More than earning a good salary or starting a business, if they can learn to manage money successfully on their own, they will be more fulfilled and happier in life.
My kids are still young and I am slowly nudging them towards these areas, but hope to get them well on their way towards a place of financial prudence and with the power of compounding over a long time ahead, they can be successful smart investors learning from my mistakes without having to repeat them.