Children understand the value of money

On our last family holiday, my 11 year old son caught me off guard by asking for a Playstation 4 (or PS4) instead of the phone we’d promised him on his twelfth birthday, this December. I don’t know if he’d planned this or it was just a spur of the moment thing, but given the setting – us on an idyllic beach, thoroughly enjoying our respective drinks; it made for quite a weak moment as far as I was concerned and I magnanimously agreed.

But when we got back, the reality of it all hit me. I had no idea that it costs over Rs. 30,000.I thought a Rs. 10,000 phone was being replaced by this gaming ‘thing’ and it would be in the similar price range. This was way above anything we’d bought for him and frankly, a little over the top, just to play FIFA 15 (or 16).

On the other hand, I’ve always insisted that we must all stick to our word and do what we say we will. Faced with 2 bad options, I tried to subject him to some early money management lessons and see how he compared to our Bigdecisions’ users!

I agreed to buy him the PS4 but he’d have to earn it, by saving up for it. Since, he gets no pocket money, all savings, real or notional would be jotted down. And when all the savings would add up, we’d order it.

I’ve been quite amazed to see all the sacrifices that were being made – cheaper haircuts, foregoing dinner at expensive pizza restaurants and the likes. He went ahead and exacted birthday gifts from both sets of grandparents and committed that money towards his PS4. He also became the electricity manager of the house, where any savings on the standard bill would be counted as savings generated by him.

All of this was going pretty well for a couple of months until he asked if he could take a loan against future savings and buy the PS4 much before his birthday in December. Of course, kids can con parents! I gave in, on the condition that he now had to save another Rs. 2000 as ‘interest’, in order to fast track the purchase. This interest will also get the younger brother a favourite and much sought after toy.

Fast forward to the present – the PS4 and the toy are both home, with Amazon being the prime beneficiary apart from my two boys. I hope, given the frenetic pace at which savings are being clocked up, we’ve achieved the following with my boys:
1. They’ve learnt the value of having to earn your way to something you want
2. They’ve realized how much wastage there is on an everyday basis – if cheaper options are available, must we always spend more, just because we couldn’t be bothered?
3. Borrowed money has costs and you’d better be ready to pay them if you want instant gratification!

Hopefully, these lessons will stay with them and my older son in particular in the years to come. For now however, it seems like the PS4 has suddenly made life much more worth living for him!

On a more serious note, I’ve been quite amazed at how intuitively the mathematics of saving and borrowing come to younger people today. Safe to say, all around that they’re a lot smarter than we were at their age!

This article was brought to you by Big Decisions

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