We were at a store. A young family was shopping. The mother picked up an expensive bag and examined it fondly. She looked at the price tag and sulked, but refused to move on. The father shook his head in disapproval. She pleaded, persuaded and he relented. Their little boy who was watching all this unexpectedly broke into tears, screaming: “But you don’t let me have what I want!”
The parents were embarrassed. The mother got into a long loving conversation with the child, explaining as best as she could. But the point she missed is that children do not learn from spoken words; they learn from behaviours and observation.
Attitudes about money and spending are formed at a young, impressionable age and they stay for life. There is an important parental responsibility to inculcate the right money habits, by being cognisant of the fact that there is a money culture of the household, evident in its actions and behaviours, and actively picked up by children.
How we treat money, how we spend it, how we externalise our thoughts when we face a dilemma, how we respond to money—all these leave behind several clues about our desires, greed, discipline and self control, and form the money culture of the family.
Three major inputs shape attitudes about money—childhood experiences, parental behaviour and the micro environment in which money choices are made by the household. What is interesting is that children do not imbibe what they see mindlessly.
Children observe and form their attitudes about money after processing what they see and understand. The response can vary—implicit conditioning; submission to authority; rebellious resolution to be different; deep disapproval from a divergent moral compass; and so on. There is no right or wrong, just divergent takeaways.
Parents may not be able to always consciously shape these attitudes. Only a small portion of information we pass on to others around us is explicit and conscious. A large part is implicit, unknown to us, but very evident in our words, actions and behaviour. Others pick it up easily, especially if there is consistency. Children excel at it. When we cringe about being judged, we may have actually provided adequate information to others for making those interpretations.
How do we behave, to enable a healthy money attitude in our children?
First, honesty is the best policy. Do not craft an image that represents who you aspire to be. Make peace with who you are, as the real you will show, despite best efforts. If you spend money recklessly, let the children know you also regret it and are trying to reign it in. They will enthusiastically support you. Coming to terms with your own money attitudes is an important first step.
Second, authority works in the early years, if at all. Do not seek submission from children. “Because I say so”, is a poor strategy. As they grow up, children will defy authority anyway. What works instead is a firm stance that you hold for your decisions, fair and just in how you apply it. The difference is that you don’t seek to control the response, but are always in charge of the actions.
Third, there is no need to lay it bare. Children need not know what you earn, how much you are worth, or what is the value of their inheritance. Such information is not required to form money attitudes. Instead it can breed complacency, anxiety, entitlement or fear, depending on how much you have. Focus on making money decisions as a family, without making it look too easy or too difficult.
Fourth, involve the children when the going is tough. Let them know sacrifices are needed. But try and make it fun. Our dad would create a hilarious drama of delicacies to pass around. What was on the table was a simple one pot dinner. We kids knew there wasn’t enough, but we did not see it as grim and laughed heartily at every dinner. He made every little activity so much fun, that our poverty failed to matter.
Fifth, focus on the unswerving morals. That is your biggest contribution to your child’s money attitudes. If you were faking bills, evading taxes, cheating on little things, and underpaying your staff, you put to risk the money morals your kids will develop. They may rebel in disgust and become upright and honest as adults, but you can’t take that chance. Virtues of sacrifice, justice, equality and hard work are all picked up at home.
Sixth, do not dwell too much in the past. Children seldom appreciate the context as they have never been there. In our times, we did this and that and were a happy bunch is actually a useless story. Nostalgia is our crutch to appreciate our present. None of us will go back to those days of struggle, nor is it pleasant for someone who is struggling. Don’t needlessly romanticise the past. Help children by making fair, consistent and responsible money decisions, knowing they are learning from you.
Seventh, the role of money in the life of children is about the security it offers. Do not reduce money to its crass basic function of buying things. Help the children visualise and imagine a better future, fueled by their effort and contribution. Enable them to see money as a means to that end. Do not oversimplify it by pretending there is enough money for anything, or there is not enough to go around. Children pick up arrogance and anxiety quite easily.
Eighth, help the children understand your money decisions. Create scope for consensus in making decisions about money. Letting the child know that the budget for the birthday celebration is a given amount, will help them make choices about how to spend it. Children pick up the threads of conversation as you discuss the options, and allowing them to participate helps them see how to make choices.
There is no rule book to parenting. We all do whatever best we can. But every self aware parent out there knows that the child is learning from how the parents behave and act. That responsibility can’t be taken lightly.
(The author is Chairperson, Centre for Investment Education and Learning)