Meenakshi Khanna


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New Delhi: Saurav, a 7 year old boy in Deoghar, Jharkhand saves money from the pocket money he receives from his parents. Eight-year old Sonali has made a piggy bank in which she is saving money to buy her favorite toys and chocolates.


To engage successfully in today’s world, families need to make sound and well-informed financial decisions not only for today but also for their future. But the skills of prudent decision-making start developing right in the early years. Parents should focus on financial empowerment of children at a young age itself when their minds are open to understanding concepts and building notions. Habits of planning, saving, sharing, wise decision-making when instilled in childhood go a long way in ensuring a financially empowered adult. But what exactly is financial empowerment? Is it only about saving money and spending it wisely? Or does it go beyond, with money being just a part of it?


 


To explain in simple terms, financial empowerment means having the capacity and mindset to set goals and to be more confident in making sound financial choices in order to achieve those goals and transform those choices into desired positive behavior change. It is all about giving individuals, especially children, an idea of dreaming about what they want to achieve, working hard towards achieving it by planning and making wise choices and in the end, fulfilling their dreams. In order to be financially empowered, children and adults alike need to understand the importance of planning, the need to use money and resources in adequate and safe ways, and the value of work, responsibilities, and resources. Financial empowerment as a concept is linked to three central elements:


  • We can do it! Having a positive attitude, including confidence and aspirations
  • How can we do it? Getting to know behaviour related to self-regulation and the executive function (conscious control of thoughts, feelings and actions) that can help to define, plan and achieve goals
  • What information do we need? Having the knowledge and information necessary to achieve financial empowerment and to achieve your financial and non-financial goals

Goals-setting and planning


First and foremost parents need to begin with building the confidence of children by developing a positive attitude towards setting goals. Parents can help their young ones make small choices/decisions and take on responsibilities to help develop self-esteem, identity, and autonomy. This can be done by encouraging an “I can” attitude in your little one: “I can save, I can plan, I can do it, and I can achieve my goal.” Allowing them to make their own decisions and to take on responsibilities, helps build self-confidence. Parents can involve children in simple plans like planning for a picnic or a vacation. Guide your child in assessing what kinds of items, clothes, footwear, food needs to be packed for that vacation and what additional items need to be purchased.


Needs v/s Wants


Parents need to inculcate the basic understanding of needs and wants among children by explaining that a need is higher on the priority scale than a want. So while wants can wait, needs should be addressed immediately. Most often for kids it is hard to wait for the things that they want- whether it is a toy that they are desperately eyeing or a muffin that they are begging for. Let them differentiate the item on the needs v/s wants scale.


 


While this is a difficult skill for kids to understand and adopt, parents can help them here. Many videos, songs, activity sheets available on the internet can be a great aid for parents. You can check out the ‘Needs Vs Wants’ song by Gali Galli Sim Sim where Elmo’s mother teaches him that woollen clothes that he needs for winters are more important than a belt which he can buy later as well.


It’s also critical to foster an understanding that considering and valuing others’ needs is important, whether those needs are the same as or different from one’s own.


Delayed Gratification


Parents can help develop self-regulation by encouraging children to save their pocket money and monetary gifts that they receive from elders. Savings is also a kind of waiting- waiting to collect enough money to use it later to buy something they want. So when a child learns to wait they are learning the basics of self-regulation and delayed gratification. Parents can help children maintain three types of piggy banks: “saving bank”, “spending bank” (money saved to buy something later) and “sharing bank” (to give away/share with family and friends, this can also include money for buying birthday gifts for friends). Parents can use market trips to explain the basics of making choices. When purchasing an item in a store ask them, “What happens if we don’t buy it?”. You can also use the opportunity to compare prices or lookfor discounts.



One way that Sesame Workshop in India (SWI) helps kids learn concepts of delayed gratification, saving, sharing etc is through a travel game. Kids start the game by selecting a travel destination and then work towards reaching there by planning, working and saving the play money given to them. Such games along with other innovative content are being used by SWI for the “Sapna, Bachat, Udaan” initiative, which aims at helping children and the adults in their lives set goals, have aspirations, make plans, and understand that the choices they make every day could help them achieve their dreams. Through interesting activities and content which are designed especially for children and their caregivers the initiative helps to improve the knowledge, language and strategies on financial literacy, increase the dialogue between parents and children towards making informed choices about spending, saving, sharing and to help them realize their financial and non-financial dreams.


Value of work


It is also important to tell children they are much more than the sum of the things they own and that they are not defined by their possessions. Every child has friends and family who love them and their love is not defined by the possessions they own. Children should understand that adults work to make money in order to survive and to take care of others (e.g., family, community, society, etc.). Parents can help children understand the value of work by asking them to perform certain chores in the house to earn some cash (not their usual responsibilities, but extra tasks) like washing the car or helping in folding laundry. Financial empowerment is all about helping children become responsible and wise decision makers.


Involvement


Parents should encourage children to get involved in household activities to help meet the family needs like asking the child to help while cooking by passing food items, utensils, etc. or asking the child to clean their room or to take care of their sibling or guard the pet or clean the garden. This way kids learn to value and take care of not only their own possessions but also those of friends and family (e.g. taking care of toys, helping to care for a sibling, etc.), and those possessions that belong to all of us, such as natural resources in the environment.


Money is a part of a child’s everyday life beginning with observations of the money habits of adults. It is important for children to develop a strong foundation that encourages wise financial decision-making—thus contributing to their future growth and achievement. Given how important financial skills are to navigate our life, it is essential to teach kids about financial empowerment at a young age. This will encourage them to be responsible and help them avoid bad financial habits later. Children need to be guided towards having a future-oriented approach about how by investing only a little desire and confidence along with some self-control today, a better result can be achieved tomorrow.


(Guest Contributor Meenakshi Khanna works with Sesame Workshop in India.)