Financial planner Chenthil Iyer feels children should be introduced to finances at the age of 7
Chenthil Iyer, financial planner and author speaks to Anjali Shetty at the Pune International Literary Festival (PILF) on the need to expose children to financial matters at a young age and why practical knowledge is important. Following are some excerpts from the interview.pune Updated: Sep 10, 2017 16:55 IST
What is the best age to introduce children to the world of finance?
The right age to introduce a child to the world of finance is seven. The reason is that at this age, he/she is learning arithmetic skills in school. The biggest problem across the world today is that we do not involve the child in a financial discussion or decision from an early age. At the age of seven, one is able to connect the theory taught in school with the practical knowledge given at home. Hence, it is important for you to let them handle money and understand the practical use of math that they are learning in school. This helps reduce financial mistakes made later in life. If their base is clear, they will be cautious with money later on.
Where did you get the idea to start workshops from?
I have been a financial planner for 15 years. I found my clients were financially illiterate. They would mess up their finances and then come to me for solution. I started research to know what was wrong and that is when I realised that these people were suddenly exposed to money. They had never handled or managed money before. Hence, it led to confusion and then mistakes. The idea came from my profession. We need to introduce the concept of finance in schools. It has to be considered like a life skill, just like swimming or self defence. Personal finance needs to be taken seriously.
How does one introduce a child to the concept of financing?
Parents should let the child know the price of what they ask for. Nowadays, parents live a guilty life, where they think because they had a tough childhood, their child should have everything right from the beginning. What they don’t realise is that, this way, you are weakening your child. You are offering them free toys and bribes, because of which they will never realise the importance of money. You have to let them make the buying decision, then get them into the habit of saving. Start trusting them with money. Teach them the practicality of expenses by letting them make their own purchases.
What should parents do?
Parents have to start doing it with examples. The moment you start recording your expenses, children will learn to do the same. Children follow the ‘monkey see, monkey do’ behaviour. They understand only when they see a practical example. Parents should give money to them and let them have a sense of ownership. Let them make mistakes and then take them through their decisions. Yes, but do not preach but, practice.
Should parents introduce children to a financial crisis in the family?
Children understand intuitively. However, there is a tendency that children may take a wrong learning from the experience. So, it is important that you communicate well with them. Simplify the situation to them and connect with them.