Money lessons for your children

Money does not grow on trees is an old saying. But when it comes to children, they actually need to be taught that.

For instance, when parents have withdrawn money from automated teller machines (ATMs), their children think that it is a machine that dispenses cash for one and all.

Seldom do they realise that to withdraw money, their parents have to earn and deposit it in the bank.

There are many irresponsible money habits. But the biggest is impulse spending. How many times have you walked into a store, seen something and immediately picked it up?

Originally, you might have just gone to buy a pen. But you come back with a bagful of other goodies. It might not matter where the person is a judicious saver. However, if this irresponsible habit goes overboard, it can slowly turn into a nightmare.

The best way to address impulse spending is to teach your children to delay gratification.

Tell them to mull over the purchase of a big-ticket item, don't forget to set the limit or ask them to set a limit on what is reasonable and what is expensive. Chances are they will forget about it.

If they press for something, tell them they do not need it now and you can look at it later; this tactic works especially well with small children. Take them away from the store and chances are they will never ask for it, unless you go back to the same store.

Teach your older kids that a credit card is a smartly packaged, high-cost loan. If they must buy, it must be with money they have and not borrowed. Tell them to carry cash in their wallet, as they grow older. You can swipe a card for Rs 10,000 but if you have to pay the same amount by cash, you will rethink your purchase.

This habit of impulsive spending develops at a very young age. If your kids ask you to buy everything they see, you must not oblige them all the time. Hence, the importance of saying no and sticking to that decision, no matter the degree of the tantrum or the duration of the tears.

Kids should understand they will not get everything they want. This is a good lesson for life and trains them for the real world. Besides impulsive spending, other dangerous areas could be stealing money from the cupboard or wallet, betting, spending indiscriminately on friends just to be seen as a 'cool dude', doing drugs and several other things.

You will not even realise when these things turn into addictions. Parents should see warning signs, such as:

Money or things frequently missing from home

Money beyond pocket money levels in the child's possession

Loss of interest in studying and sudden drop in examination marks

Expensive things in their possession that you have not bought or they have not got as a gift

Sudden change in personality and spending a lot of time away from home

Educating children is a key step in addressing money and other issues they could face.

Your role is extremely important and hence you must not leave such responsibilities to teachers and educators. Think over what messages you been sending them about your values and beliefs around money. For instance, if you lead an ostentatious life, with late night parties happening every other day, your children will want to do the same.

And someday, you may feel that this lifestyle has taken a toll on your health, and wealth as well. But at that juncture, expecting your children to follow your footsteps would be silly.

In an ideal situation, thriftiness should be inculcated at an early age. But if, as a parent, you are unable to do so, make sure that you aren't the bad example that children follow.

Nowadays, many parents are often unable to spend enough time with their children. Instead, they are left at with servants.

One is typically reminded of the Amitabh Bachchan starrer 'Sharabi', where the young boy is addicted to alcohol because the father recommends brandy for the son if he suffers from cough, cold or lack of sleep. The situation may not be so bad most of the time but it is important to spend time with your child, and counsel him regularly.

Sometimes, you may need professional help or help of other family members.But don't shirk away from seeking such help. Often, parents feel that exposing a domestic problem in front of others is shameful. But it can only worsen matters. A professional counsellor can provide private sessions and recommend solutions.

The writer is director, My Financial Advisor.