August 10, 2010 | Posted in Family Finances | Post a comment | Share Article |
by Rohan Marshall
I was the guest on a talk show recently discussing and encouraging financial education for children. During one of the advertisement breaks, a listener called in and gave me a tongue-lashing for trying to force kids into an adults’ world. I’ll call him Mr Calm.
“All you need to do for children is to teach them good values and the financial matters will fall into place when they become adults,” Mr Calm told me quite angrily.
While I was considering what I had done to deserve such focused passion from Mr Calm, it occurred to me that there are many in the same boat. Not necessarily angry, but blissfully ignorant of the money challenges facing our next generation.
First of all, let’s get one thing straight: children hate to be “taught values”. It’s not up there in their top million things they would willingly endure.
Pulling their own hair out ranks higher. And yet parents feel a sense of accomplishment every time they try and jam some value down their child’s throat.
Imagine some food you don’t fancy, say, rats (still regularly eaten in a fairly poor country, I’m told). Next, imagine someone forcing this food down your throat – every day, maybe every week. And they tell you it’s “good for you”.
Doesn’t mean you’re going to grow up into a person who goes all warm, fuzzy and teary-eyed each time someone mentions “rat dumpling” to you.
This is what a child experiences when “good-for-you” values are repeatedly aimed at him – especially with finance. There is nothing more boring than the traditional way that financial prudence is taught. Even the term – financial prudence – reminds one of an old, mothballed aunt. Appealing, it is not!
When I was young, my mother told me with weekly regularity that I must “sit down and save 10% of all my pocket money”. For my mum, anything worth doing had to be done “sitting down”, don’t ask me why: “Sit down and study”, “Sit down and consider your future”, etc.
Anyway, I grew up hating the concept of saving. I “sat down” and spent as much money as I could get my hands on just to exorcise that dull droning in my head which I later recognised as unspent echoes from my mum.
Don’t get me wrong. Mum did fine. I eventually got my head on straight, but I figure I could have prospered earlier had there been a more thought-out approach than the sit-down one.
I don’t blame the parents. That’s how they were brought up. That’s how they were going to bring up their own.
But consider this: more and more of our young are ending up in financial chaos – at earlier ages!
Last year, the Director General of the Insolvency Department was quoted as saying that 50% of those declaring bankruptcy due to credit card debt over the past 5 years were below the age of 30.[1]
How can this be? Easy. Debt is easily available to the young and newly qualified.
Housing and car loans. Executive collateral-free loans. Credit cards. Easy payment schemes for TVs, furniture, even investments.
But it’s still borrowing, right? And good values say, “Neither a borrower nor a lender be”. So why do these young people fall into the debt pit?
To understand, one needs to see the world from their eyes.
The young want, maybe need, to have fun on a regular basis – very possibly influenced by an unrestrained upbringing or an overly regimented childhood.
Now, fun costs money.
And money is available. Initially – from their new salaries.
But soon, it is not enough. A night out on the town could well cost into the hundreds. Assume one night a week out at the clubs, and a fun-loving guy could already be saying goodbye to between a thousand and two thousand ringgit a month.
Factor in car installments, car maintenance, petrol, entertainment (DVDs, cinema, digital gadgets etc.) and money spent on the boring essentials of food, shelter and clothing, and Generation X is soon slip-sliding away.
The various forms of debt – including credit cards – do not actually present any fear to the young adult as it represents his access to cash.
Paradoxically, the fact that one uses a credit card (in effect, borrowing money), instead of cash, is a source of pride instead of shame.
Where older ones may worry about mounting debt, younger ones glow in the imagined admiration they draw as they flash out their platinum or gold.
Gold is the ‘minimum’ colour-of-card these days. One would rather actually pay cash than to admit possession of a “classic”, basement entry-level card.
Only when one runs out of traditional credit sources and is tempted to borrow from family, friends or the street-corner Ah Long, does realisation begin to dawn.
Too late! It may take another 10 future years to pay for 2 past years’ excesses.
Let’s leave it to the political do-goods to handle it from there and step back a bit.
Who is to blame for these young people’s predicament: they themselves? I say not.
My view is that, without meaning to, people like Mr Calm above allow their children to wander to the stream of debt. It is only a matter of time before they drink. Mr Calm and his ilk refuse to energise and inspire their children towards financial health and independence. Not consciously, mind you, but by simply ignoring the harsh but undeniable facts. Children brought up with good values still fall victim to the lure of debt. They have grown immune to being nagged at about savings. In fact, I think that they actually rebel just to prove a point. That they can, that they are in control.
We need to recognise that there is clearly a crying need for financial education among the young. We teach them religion, why not finance? We watch sports with them; why not enjoy a financial thriller together? We ask them to save; why not consider small investments?
Our children need to understand that personal finance management is a dead serious matter they need to get involved in.
It is not something to be talked conspiratorially about in hushed tones in the hallowed, boring halls of adulthood.
Children need to learn finance early. They need to have fun managing money. They need to know the joys of delayed gratification for a greater goal or good. Children need to enjoy saving and growing money from young so as to be motivated to pursue the same habits joyfully into their young adulthood. The habitual fun experienced in employing good financial habits must grow to be more than that perceived in fast cars, regular clubbing and possession accumulation.
Values are important, but financial distress tends to challenge every basic value that a “well-brought-up” kid has. Believe me; I’ve seen enough of these lovely kids crumble.
We need them to sit down and get seriously happy about money matters.
We cannot afford to wait. We need to get the kids into financial gear now. Or we can choose to condemn to financial ruin through our conscious ignorance.
[1] Malay Mail, 15th June 2009, “Credit Card Debt and You: Under-30s under siege”
About the Author
Rohan Marshall is a professional trainer and consultant who often works with children on various issues. His company, People Systems Consultancy Sdn Bhd, has established a Child Financial Education Programme that is conducted weekly and holiday classes for children aged 6 through 17 years old. The programme is called “Millionaires of Tomorrow”. Other courses are also conducted for both children and adults during school days and during the Malaysian school holidays. For further information, please contact his office at 03-7728-2528 or email him at rohan@peoplesystemsconsultancy.com.
