Teaching Your Kids Financial Literacy? Make It Fun: Sirisha Kuchimanchi (Transcript)

Here is the full transcript of Dr. Sirisha Kuchimanchi’s talk titled “Teaching Your Kids Financial Literacy? Make It Fun” at TEDxCapeMay 2024 conference.

Listen to the audio version here:

TRANSCRIPT:

The Financial Struggles of Pro Athletes

I want to start by asking a question, and I want you to take a second to think about this. Do you know how many pro athletes, after stepping off the field, have a strong financial future? If you thought the number was greater than 75% of them struggling financially, that is true. 78% of pro athletes go broke in two years.

These are athletes who earn over a million dollars a year. Ellen Iverson, who had a career earning of $200 million, declared bankruptcy. What this shows to highlight is two things. One is financial well-being and financial future is not defined by how much money we make. It’s about the habits and the traits we learn that enables us to build these strong characteristics.

In U.S. schools, less than 30% of them teach financial literacy, and globally this number is only 33%. So what this goes to show us and underscores is financial literacy and financial education really happens at home, and what we need to do to teach our children and our family and the communities that surround us.

Teaching Financial Literacy Through Practice

So when my son was eight years old, he wanted to buy shoes before school starts. So he was clear that he only wanted Reebok shoes. So we went to the store, and he picked up a pair of shoes that he really liked, and he came and showed me the box. And the box showed $80 or more for the shoes.

And at that point, I thought it was a bit too much for an eight-year-old, so I told him that when I left home, my budget was $40, and anything over $40 was going to come out of his pocket.

So he thought about it and went and put the shoes back. Then he picked up another box, and you could start to see the wheels turning in his head.

$60 shoes. You know, is he really going to spend $20 for this? He puts it back. $50? Maybe not. He puts it. He comes back and asks me and says, “Can we go to another store?” I was like, “Sure.” So we went to another store, another one, another one, and then another one.

Well, this was the last sneaker store left in the mall. And we walk in, and he finds shoes. They’re $39.95. He’s very happy with them, and so am I. I do confess, I paid taxes on this one. So he was under budget. The thing that it underscores is, by teaching them through practice, practice, and practice, is how decisions are made.

When I was in elementary, middle school, I grew up in India. My mother would send us down the street to go buy vegetables for the house. There were two choices to make. Of course, I had to stay on budget with how much money I had, but that wasn’t the hard part. The hard part was for me to decide which vegetables I was going to pick, because the ones that were easy to pick were the ones that I didn’t like to eat.

Enabling Children to Make Financial Decisions

So there’s always this conflict on which vegetables I was going to pick to go home and eat later in the day. So when we think about this, many of us have probably experienced this or seen this happen in a store. You might have had a child have a meltdown or a tantrum when you’re going to the store, or seen another kid being extremely frustrated.

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It leads to a lot of frustration, anger, somewhat embarrassment as well for us. But look at it from the child’s point of view. They come with you to the store.

You don’t usually tell them why you’re going to the store. You walk down the aisle, pick up a bunch of stuff, swipe a piece of plastic, and voila, all the stuff comes home with you. And when they ask you at the same time, “Can I buy this? Can I get that?” Our answer is usually, “No, I don’t think you should get that. I think it’s expensive.”

So then they start to wonder, are we rich? Are we poor? Like, what does this mean to us? So the next time you go to the store, one option is to enable them to make decisions.

A quick show of hands, how many of you have ever packed a school lunch for a child? Oh, a lot of you. You know, that is the part that I dread most when school opens. It’s not the exams. It’s not the teachers. It’s the packing the lunch in the morning at 6:30. And then your child comes home at 3:30 in the afternoon and opens the lunchbox, and it’s all still sitting there.

By going to the grocery store, you can ask them next time to prepare a grocery list of what they want to buy. It cannot be fruit roll-ups and candy bars. It has to be something more.

So giving them that opportunity to craft that list, going to the store, helping them choose what they want to buy, and deciding what they can get, enables them to make decisions. See, the reality is the consequences of these decisions that they make early in life are so small that they can do whatever they choose to do and try different tactics that work for them.

Teaching Children About Investing

So beyond teaching them how to spend money, one of the big important concepts is about investing it. So that can be through things that they love. It could be through Mattel. It could be through Nintendo. It could be through Sony. Maybe investing in what runs Minecraft.

You know, the things that they care about. Matthew borrowed money from his family to buy servers to host video games. He was in the fifth grade when he did this. And now in high school, he continues to earn a passive income from this investment. Arun was able to get a pay raise and negotiate a pay raise of 40% when she moved to her second job. She was 22 when she did this. And her friend’s mom told her not to spend it all, but to start investing the money.

And there are many ways to invest it. And what she was able to do with this is, at 25, she was able to buy her first house. 20 years later, she continues to get a rental income from that and feels incredibly proud. What this tells us is, family conversations and financial conversations don’t have to be just from the parents. It can be from friends.

It can be from the ecosystem that’s around us. One of the things we did at home was play Monopoly. And what it taught us was deciding where to buy and set up a hotel or a house. You know, if you’re playing it, you’re trying to amass all the railway stations, maybe the utility companies. Those are the ones with the power in some ways because the multiplicative factor happens there. And so thinking about how to teach them negotiating skills comes from this aspect as well.

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Teaching Financial Concepts Through Play and Conversation

I started to pay my kids an allowance around the age of five. But I have to confess, I was pretty terrible as an employer. I did not pay them often for weeks and sometimes months. But I always took a note of when I paid them last. And my kids got smart. They would start to negotiate an interest every time I paid them late.

And on the flip side, this was even worse. Having taught them the skill, when I needed to borrow 20 bucks from them, they charged me a dollar or two dollars interest. And you have to realize, no bank actually pays us this much, right? So they were obviously doing really well from this transaction.

So teaching them these things is a fun way. Obviously, you’re also learning a lot of things from this. One of the ways to teach taxes, we all know that when we sketch and sign that offer letter that the paycheck that we actually deposit never reflects the number we signed up for.

So when I go Halloween trick-or-treating, I collect federal income taxes in the form of Almond Joy and M&M Peanuts. I live in Texas. There are no state taxes. But if I did, I would collect it in Snickers bars. So Halloween is around the corner. Think about how you want to collect your taxes.

Shaquille O’Neal collects something called food tax from each of his children. So when they order a meal for takeout, he takes a bite out of each one’s meal as a form of tax. Whitney’s dad is a CPA. And what he would do is every time he bought her an ice cream bar, he would take a bite and say, “Insurance and taxes.” The thing about it is not just making the make decisions, but having conversations about money becomes very important.

Involving Children in Financial Decisions

So when we were moving away from our first house, one of the things we started to decide was whether to sell the house or rent the old place. My kids were in elementary school, late elementary, early middle school. So we asked them, “What should we do?” We talked to them about mortgage, about rent, insurance, taxes, capital gains.

In all of it, it’s simple math in the end. So we asked them what to do, and they had their own suggestions and opinions. In the end, you have to realize you’re asking for a suggestion. You are the decision maker anyway. But it helps them to think and learn the concepts of financial literacy. So having all of these aspects makes it very important for them to establish how to do this.

Research shows that repeated practice, practice, practice is really what enables this. It’s not just having a conversation around it. Brigham Young University did a study with young children and teenagers, over 4,000 of them, and found that when you do this conversation and this ability to carry on transactions and have the conversation around how you’re choosing to spend, how you’re choosing to invest, and just all of these aspects of it, that these people, when they become young adults, show good financial efficacy and become more financially independent at a young age.

When they extended the study, they also found that it leads to better mental health outcomes, less anxiety and depression. And when they continue to extend how to look at it from a different standpoint, it leads to better relationships. I think, anecdotally, we are not kind of surprised by this because we know the amount of stress finances lead to in our lives.

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Sharing Financial Numbers and Stories

So when we think about it, let’s think about how we can spread and do this. But one of the things that also becomes very important is what I call sharing the numbers. This is a very awkward conversation.

When you start to tell your kids how much money you make, how you invest, how much debt you might have, and all the different aspects. But it is very critical to have this conversation because that’s how they’re going to learn about all the different aspects. But I would caution you about this. You do not want to share your numbers with your five-year-old because you know what they’re going to do. They’re going to go to the playground and tell their friends promptly what you just told them.

But money is not just about the numbers. We know it’s more than that. It’s about the emotions, the feelings, the stories that we have heard all through our life. I talk to a lot of women. I host a podcast. So what I’ve learned is many of us feel uncomfortable with managing our finances. And one of the ways we learn about money is through what I think of as money stories.

Money stories are the stories we heard as children that were told to us and the stories that we continue to tell our own children. So think about what money stories you want to tell your children, your family, your nephews, your nieces, your grandkids, or anyone in the community that surrounds you.

Be also very intentional about the money stories you’re telling young women and girls because as they step into a different world and they are trying to grapple with pay gap and investment gap and being able to negotiate for themselves, this becomes a very important skill.

Personal Money Stories

My money story was on the back of a Bajaj Chetak. It was a blue two-wheeler scooter that my father rode in India. That was our main mode of transportation. And me and my sister would go with him to the bank, when he deposited his checks, when he paid the bills. We would ride on the back of it to go to the stockbroker when he made his investment decisions and also go with him when he paid off his housing loan early.

Your money story can be in many different locations. Mine are sometimes at the dining table, but often they’re in the car, but I have a totally captive audience. So I have only scripted a few chapters in this book that I’m writing. I do not know how the story ends, but I urge each one of you to start writing your money stories and impacting your families and the communities around you.

I grew up in India where I celebrated Diwali or Deepavali as we call it in the South. It’s the festival of light. It’s about dispelling darkness and shining a light. So I think it’s important for all of us to shine a bright light of knowledge and remove the taboo and stigma that surrounds financial literacy. Thank you.