Lesson 1. Why Should You and your Child Understand Money?

Why Should You Understand Money?

 

I am unsure why Money Speak is a societal taboo.

Why someone is labeled spiritual when bankrupt and immoral if rich? Truth be said- think logically- how can someone afford spirituality when their bank account is marketwise in red.

If what you will eat for lunch, where you will live, how educated will your children be, all these minute by minute decisions are controlled by the amount of money in your bank; when do you get the time to spare for God?

Honestly this commonly held creed mystifies me.

If every waking hour is consumed in the quest to make daily ends meet: how are you entitled to a morally higher ground than what the rich walk upon?

1. Catch them while they are young

I hold that for an individual’s education to be well rounded Money and Money Management should be an integral part of a child’s formal schooling.

Failing that, instead of allowing your child to absorb by osmosis mythical economic dogmas that prevail in our environment every parent should be proactively taking steps to ensure their child develops the right attitude towards money and healthy habits of money management early in life.

2.    Money you earn is the Measure of Value you add

To help simply understand Money, assume it analogous to a measuring scale used to determine how valuable a life has been to society at large.

And so removing the Confundus Charm on those unable to make money but wanting to make loads of it: If you want to live in the masses serve the classes but serve the masses if you want to live in the classes.

If you have a business idea put it to this litmus test first. Will the product you are designing, the service you are offering, the idea you are marketing impact the life of the man on the street positively?

If it does, whether you are a Mother Teresa wannabe or the next Larry Page or Sergey Brin you will never have to chase the dollar bill a day in your life, instead the dollar bill will chase you.

Like it or not, the money you earn in your life will always be a progressive realization of the value you input in other people and their lives.

3.    Money is a byproduct of your happiness

To Be Yourself or, Follow Your Heart is not just good advice to live life. It is sound money philosophy.

You are designed for a purpose and that purpose calls you to it. It is a deep rooted conviction that you possess; a voice so strident it rings in your ears though silent to all others. You are consumed by its passion and you would work on it even if you were not paid a dime to do the job.

Pursue that calling. You will never live an ordinary life.

Shakespeare wrote:

There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.

Truth is self-evident. You do not need my arguments to persuade you to its logic.

It is liberating too. Parents instead of pushing your child willy nilly towards a high earning job sometimes at the cost of your relationship and tragically sometimes at the cost of your child’s life allow them to develop their innate talent to its fullest expression.

Guide them to the best of your ability, motivate them with love and by all means instill in them a self-discipline that will stand them in good stead. Just don’t rain on their parade. Trust them and encourage them, that skewed perspective of theirs might win them respect and recognition in this world.

Understand the process. You must choose your profession first and work at it before you can earn a living from it. Logs of wood must be set on fire first for you to enjoy their warmth and light or cook your food.

This process cannot be reversed.

Similarly, it is demented to choose a profession based on what paycheck can you earn from it at the end of the day. Every four to five years a wave arises, a revolution takes place in the workplace. So eighteen years ago parents wanted their children to either be lawyers or in the Civil Services or Defense Forces, then ten to fourteen years ago all were encouraged to either be doctors or engineers, then an era of MBAs and CAs then software engineers…

Parents are not wrong. They want to see their child earning a good income and living a posh lifestyle. Their driving emotion is that their children have all the comforts in life they lacked or were denied to them. So they analyze the market trends and accordingly offer job advice. But by the time they understand the trend and it becomes traditional wisdom the market is already saturated. Money making opportunities are less, layoffs are more, frustration is high and the job satisfaction their parents told them legends of nothing but a workplace myth.

Is it surprising that parents suffer the backlash?

That boy who was promised bagful of gold to play Cricket for his country is tempted into match fixing, the girl who dreamt of being the next Miss Universe is seduced by some opportunistic judge and Miss Movie Hopeful is starring on the Casting Couch. There is no moral she will not bend, she has no problems with showing skin or doing risqué scenes. Everyone does it these days, she rationalizes. In her interviews a common refrain is- Compared to my competition I have worked very hard to get where I am at. I have made so many sacrifices…

I don’t doubt you sister. See it’s your life and so who am I to judge. But, are you happy with the sacrifices/ choices you made?

Is that alcoholism or drug abuse, anorexia or clinical depression not a sign of some deeper issue that you are trying to sweep under the carpet?

4.Working from 9 to 5 you will only earn a living. It’s what you do after 5 defines your passion and really counts in money making annals.

I think where Bill Gates, Jeff Bezos, Michael Dell, Warren Buffet, Steve Jobs got it right was that they allowed their passion full rein. In developing their dream at times working out of a garage or from the trunk of a car they helped so many others achieve their dreams and in the end created something far bigger than them.

If after 5PM you are working on your own initiative on a subject of your choosing chances are that Dollars, Pounds, Yen, Rupees and Roubles will soon come chasing you much like the brown mice, white mice, fat and thin mice, uncle and aunt mice dancing at the Pied Piper’s heels in the fable.

5.    Want to understand who you are- check where you spend your money.

I just want to write. My dream is to backpack across Italy with my family a laptop in bag savoring each moment, living my muse.

These corny dreams are clues Watson as Sherlock Holmes would say.

If you have trouble identifying yours I recommend you list what you spend your money on. You will learn the unvarnished truth about yourself in the most non-confrontational manner possible.

Money is not just a measuring yardstick of your consequence. It is also the mirror to give you a reality check.

That promotion you thought your just due but Scumbag Boss favored The Chosen One. Your girlfriend wrongly accusing you of being a selfish Bozo, you in your vest and underpants looking skyward asking in the melodramatic manner of a film thespian- tell me what am I doing wrong here– look in your credit card statements and let your expense statement talk to you.

Were you really working on the project to meet the deadline or did you think drinking together in happy hour the smartest way to build rapport with your project lead?

Do you knock off that dishwasher as out of budget but purchase the latest iphone listing it a must have accessory to build your image with your boss and peers?

The dichotomy of man is we earn with our brains but spend with our heart.

The same man who spent a lifetime penny pinching, who would not allow any child of his to leave food on the plate will on the occasion of same son or daughter’s wedding commission a dinner menu of 120 dishes. Where is the logic in that?

Go figure.

6.Watch your money, time and space. These get consumed first and fast.

Easy come, easy go is true with money. You need to develop a stewardship or custodian or guardian mentality. This does not happen in a day. It has to be taught and a daily discipline has to be imposed on self to keep within a budget or allowance.

That is why parental guidance on money matters is a must.

People win jackpots and become millionaires overnight. Look for them in five years. You will find most at the same place economically where they were at before they won the jackpot or worse off than before.

So what went wrong?

They never learnt how to watch their money grow and have no notion that a voluntary discipline has to be imposed on our spending habits.

Teach your child healthy money management habits while they are young.

Open a bank account for them jointly. Teach them how compound interest works.

Give them a monthly allowance and make them deposit 50% of their allowance in their account. Teach them to reserve 10% of it and tithe to a temple or church or to a favorite charity.

Of the remaining ask them to make a monthly expense spreadsheet and list in it their spending. They can use the money to buy materials for a school project, save it for future use in their piggy bank or spend it on refreshment in the school cafeteria.

As a parent educate them how spending the money on frivolous purchases might afford them momentary pleasure but investing it and watching it grow, contributing to a worthwhile effort, or using their money judiciously to win an extra edge in their project will give deeper, more meaningful rewards and joy.

There are fun books you could read with them to help them understand from a third party: The 7 Habits of Happy Kids (Sean Covey son of Stephen Covey of The 7 Habits of Highly Effective People fame).

Websites you could encourage them to visit: http://www.smckids.com/

(Warren Buffet teaches children simple and easy to understand concepts of money management)

However the most practical method still is giving them an allowance letting them make mistakes with small amounts of money so that they are equipped to deal with bigger amounts in a prosaic manner without going overboard.

Parenting is hard work and nobody is handing out awards To the Best Dad in the world or the Best Mom in the World. Yet what if your child was? I bet your bottom dollar you would not want to miss out on this one. So take the time. Teach your child about money. Best thing about teaching is when we teach we are learning too!

©Ruby Mohan

© Robert F. Balazik | Dreamstime Stock Photos

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