Lets Do The Money Talk With Our Kids This Diwali

What are the first things that come to mind when we think of Diwali? Gifts, sweets, lights, new clothes, decorations and money? Yes, whether we acknowledge it or not, money is an integral part of Diwali festivities.

Diwali is considered an auspicious time to make big purchases and acquire new assets, including gold, cars and electronics. Gifting and shopping take on greater importance during the festival, and its also the time when we are bombarded with massive sales and discounts everywhere. Lakshmi, the goddess of wealth, is worshipped during Diwali in most parts of India. Families pray to her to bless their homes with wealth and prosperity. Its safe to say that Diwali is an important date in our financial calendar.

In most households, its a time of giving, receiving and, of course, spending. Its a time when we plan and budget and our financial acumen is put to the test. For these reasons, Diwali is also the perfect time to help your children learn about money.

But why should we talk to kids about money?

Most parents help their children learn various life skills like riding a bike, tying shoelaces, or swimming. However, one area that is neglected is financial literacy. Yes, money matters! Because making children aware of making proper financial decisions can help them later.

As parents, its important to remember that talking freely about finances is vital in helping your kids develop a healthy relationship with money. Money is one area that can cause either a lot of stress or happiness depending on how we manage our finances. Discussing topics usually considered taboo by parents such as budgeting, rent, loans, debt, and equated monthly installment (EMI), especially with children, can help in the long run, as these are terms that children will encounter in some form or other in life.

Talking to children about money is essential in helping them understand its value and how it works. Once they step out into the world, our little ones will need to know how to manage money responsibly. Theyll have to make responsible financial decisions, budget, spend wisely and save. In a 2020 study published in Emerging Adulthood, researcher Ashley LeBaron identifies three significant ways parents can help children learn about money:

• Sharing your own financial experiences with your kids
• Involving them in financial decisions
• Having age-appropriate conversations about money with them

Apart from having open discussions about money, here are some simple things you can do at home to facilitate your childrens learning.

Ways to instill money sense in kids during Diwali

Give them an allowance: A 2018 study conducted by the University of Arizona revealed that allowing children to handle money on their own is the best way to help them learn about finances and prepare them for future financial success. Giving children a regular allowance is the perfect way to do that. You can decide how much and how often to give them allowances based on your family budget and their age.

If your children are old enough, have a chat with them and decide on an amount that works for both of you. During Diwali, instead of buying things for them, give them an extra allowance to do all their Diwali shopping. This will train them to make independent choices, plan their spending, even make mistakes and learn from them.

Involve them in the familys financial planning: Have a family meeting to discuss your Diwali plans. Make a budget and plan your spending for the festival. Be honest about the familys finances and ask your kids for their opinions. For instance, say you cant have a big celebration this year because you havent received your Diwali bonus at work. Explain the situation to them and ask them what you can do instead. Or if you have to choose between a big Diwali party and a holiday next month, ask them what they would prefer.

Take them Diwali shopping: Your children might come to you with a list of things they want for Diwali, but do they know how much the toys and dresses cost, or if you can afford them? A big part of learning about money is understanding the cost of things. So, involve your children in Diwali shopping this year. Take them along when you head to the supermarket or the mall. Ask them to find out the price of things you need to buy. Whats the cost of a box of dry fruits? Enlist your childrens help in comparing the prices of items and finding the best bargain. Is it better to buy one expensive box of sweets or two cheaper ones? You can get older kids to help out in online shopping as well. For instance, if they ask for a pair of shoes, give them a budget and ask them to find a suitable one online.

Help them spend responsibly: During Diwali, its common practice for elders to give children money as gifts. Before they spend all of it on the first video game they see, talk to them about budgeting. Ask them to make a list of all the things they can use the money for and ask them to prioritize. Which is more essentiala skateboard or a schoolbook? Have a discussion about needs and wants, and help your children differentiate between the two. Encourage them to track their spending by giving them a book or a journal to make an entry every time they spend money.

Inculcate the habit of saving: Children often associate money with spending and buying things, as they would have observed you doing it. They must understand money isnt just for spending. This is where saving comes in. Apart from being an essential pillar in money management, saving can also help your children learn values like discipline and patience.

Encourage your children to save by giving them a piggy bank to put aside their money. You can motivate them by paying them interest on the money that they save. For preteens and teens, start a bank account. Many banks offer savings account for kids. The excitement of having their own bank account will motivate them to save.

Encourage them to give: While we help them learn about the value of things, its vital to help them learn about values, too. Theres no better time than now to help your children learn about the spirit of giving. If you have a family tradition of giving during Diwali, involve your children in it by asking them if they would like to contribute. It can be buying sweets for your household help, donating to charity or feeding the poor. You can also ask them to find a cause they care about and get them to set aside some of their money for donation.

Diwali is an excellent opportunity for children to learn not just about culture and traditions but also about money. While money sense is not something that can be learned in a few days, this is a good opportunity to start. There are many things that we parents can do to set our children up for financial success. Most importantly, let us be good role models for them. Children learn by watching and if they see us making responsible financial decisions, they are more likely to follow suit.