Learn about money as early as possible!

You are already late ...

Today’s modern world is obsessed with Financial Independence. Many people around me are talking about early retirements at 35-40 years, is it even possible? feasible? Parents are talking every day about profit, loss, gains, investments, crypto, and whatnot… is money that important of a topic? 

“Money’s greatest intrinsic value—and thus can’t be overstated—is its ability to give you control over your time.”

Very important to understand what it means and understanding this early in your life gives you a distinctive advantage. 

I have started my career almost twenty-five years ago and had started making money as a teen assembling PCs and went on earning without planning for the next 10 years of my life. I had not started to plan my money until 10 years ago — how much money should I save for the future? and how much money should I spend? We all have done this as soon we get our first few paychecks, we all tend up to spend money for our needs, and dreams, or our wants without thinking much about the distant future. This happens with a lot of people and It has also happened to me. I always had a moving goalpost when it came to what I want! When I bought something I always wanted something better and would spend more on it. I wish I had guidance or a reference book back then and things would have been much different. 

Financial literacy isn’t a standard part of most school curriculums, and it shows in reality. A study last year found that 20-somethings had trouble answering basic questions about investing, interest rates, and inflation. Also lacking a solid foundation, many adults have trouble building a secure financial life. A startling report found that more than 45% of adults in countries like the USA say they could not cover a hypothetical emergency expense costing as low as 15% of their monthly earnings –or would have to cover it by selling something or borrowing money taking loans. (ref. internet)

Another big change that has happened is as the technology around payments and money management has evolved so much in the past few years and more so in countries like India, transactions are often no longer tangible. Cash is becoming less common and learning to become financially savvy is beginning to take a much different shape than in the recent past. This is making more and more of our spends invisible. We might be spending a lot of invisible money on various subscriptions, in-app payments, online shopping, online donations, unlimited data packs, easy money transfers, and many more such options. This emergence of financial technology has increased convenience, but for earning family members, it sometimes comes at a great cost.

Take this simple example -  Games like Angry Birds, Candy Crush, My Little Pony, Roblox, Clash of Clans, etc. all geared toward kids. Education software/apps like Brilliant, Duolingo have paid plans. Each of these apps offers in-app purchases that bring money transactions straight into the hands of the users/players who are in most cases children. Most teens have their curated playlists on Spotify and seeking Spotify Student Plan. Software that helps kids with their homework, classwork like Microsoft office, canva, etc. comes at a price, in most cases a monthly subscription fee. There are a lot of online learning opportunities for kids which are offered at a cost. How are we monitoring this? Are we calculating Return on Investment in these? Are we? Should we? 

Fun fact - If you do a Google search with “games for kids with in-app purchases” it doesn’t bring up a list of games but it brings up how-to guides for parents to learn how to control or turn off the in-app purchasing capabilities, warning parents of how easy it can be for their child to accrue some serious debt on the platforms. (ref. internet)

Another Fact (not fun) - The accidental or unknown in-app purchase issue has gotten so out of control that law enforcement officials have conducted investigations into major app servicers like Apple and Google. In 2017, Amazon was ordered to refund $70 million worth of app purchases made by kids, as reported by The Atlantic in the USA. A federal judge ruled Amazon guilty of not warning customers of in-app charges after the initial download and failing to provide adequate controls in games for kids to prevent the purchases. (ref. internet)

isn’t this alarming? Hence I feel it is important to not only learn about money but also learn about Need vs Want and the importance of saving discipline early in your life. Building this foundation as early as Middle School or High School would definitely create more financial literacy among future money makers. Starting them early will give them a big runway to experiment, make mistakes and recover and succeed! 

Millennials and later-born kids are getting plenty of money-making opportunities much earlier in their life by doing summer internships, inheriting investments, pricy gifts, social media channel promotions, etc. they have a higher chance to succeed if they start investing early. How do we start though? Kids usually learn by experience so giving them practical experience to distinguish between “Need” and “Want” is very important.

Involve them during preparing monthly expense sheets, making utility payments, buying groceries, etc. Back in the day, the concept of sharing financial information has long been regarded as “taboo” in most Indian families, kids are always shielded away from the financial condition of the family but things have changed. Technology has exposed a lot of this information. Do not hesitate to show real income and expense to kids and make them understand how you are earning that money by creating what value. 

Recently I stumbled upon this book called “Psychology of Money” by Morgan Housel which tells 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics. I feel this book should be included in the syllabus at least for high school students. We want to prepare the generation to be more money aware. 

If you are already earning and never really did a deep dive into planning your money, do that now. If you have kids at home start talking to them about money TODAY.

If anyone asks me what is the right age to start learning about money I always say “You are late …” START NOW!

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