How to inculcate financial discipline in children

"Kids don't listen" - a common complaint from most parents. Very often, this comes out as frustration and is sometimes debated as if to decide whether the parents are right or not. The fact is: whether the parents are right or not, the statement is true. "Kids don't listen - they watch, they observe."

As a popular saying goes, "Action speaks louder than words."

When I go out for morning walks, I see something very irritating. Since I start late for my walks, I am normally on road at the time schools start. The act of the parents, who come to drop their kids in their personal cars, may be picked up by the kids. Their education of life may start before the school opens - everyday. Seeing their parents honking needlessly and impatiently; exhibiting their anger; parking in front of the school gate or in the middle of the road... well, the list can go on and on.

After this, if the parent asks the child to keep cool, you have guessed what the kid might think. And we have heard this argument many times over as parents.

There is a school of thought that says that your money habits are formed in your childhood. Kids observe their parents doing and they learn a lot out of their interpretation of the observations. Many times, at a younger age, there is not enough maturity to see the "cause and effect" relationship. Often, there is no patience to wait for the outcome. Most often, kids consider the act as "acceptable" and they copy.

Let me share my personal experience. I can comfortably say that my parents are not good investors - forget great investors. However, I would like to claim that they have been good managers of their personal finances. Of course, there were some financial challenges, but they were focused on the short-term goal of living a life of their choice and getting us (my sisters and me) educated. Did they understand the financial jargons? I think, no. Did they understand the importance of money in their life? Yes. Did they understand that life was more important than money? Yes. Did they understand that money was necessary to lead a life of their choice? Yes. The thought clarity was good enough.

Someone can argue that those were different days. The counter-argument is: "given their situation and their understanding, what they could do, they did." If the complications were few, part of it was their choice.

By they way, these are my interpretations of what I observed.

The point of all this is: a person's money habits are influenced by what one sees in the childhood. In the early days, parents are a person's heroes and what they do is considered as acceptable behavior. Kids copy what is acceptable.

Let us see some of the money habits kids may copy:

• The parents spend money to buy things they need
• The parents spend money they don't have only to show off
• The parents keep a tab on their expenses - either by maintaining a diary or keeping a mental note
• The parents come home after work and show how bad the day was or how tiring and irritating work is
• The parents show disciplined behavior or the lack of it
• The parents put more hours to earn than what they spend for their family

Once again, the list can be endless. Above list carries examples of some opposite behaviours. I would not like to judge what is right or wrong. It is better left to the wisdom of each one.

The only message here is what we started with. What behaviours you want to see in your kids, you can influence by exhibiting the same. It is also important to keep in mind whether you show that behavior as something pleasant. Nobody wants to copy a behavior where the expected outcome is unpleasant.

These are the values you live by.

This Diwali, resolve to give your kids "values" instead of "valuables".
Wish you all a wonderful Diwali.