What my 6 yo nephew taught me about our money instincts

I have been fortunate to have been spending some quality time with my six (or six and one quarter, as he now puts it) year old nephew. On my holiday, we have been playing, looking around, sightseeing, eating yummy food and just spending quality time.

On one of the days out, we were waiting at the food court of a mall for my sister to come pick us up. To kill time, my husband suddenly made up a money game to indulge my nephew. The game was rudimentary with no fixed rules per se but ended up giving me some glimpses into our basic psyche about money.

As part of the game, I had quite a number of coins spilled out on the table. All coins were of the same value irrespective of the size or the actual value and were simply referred to as “a coin”. At regular intervals, my nephew was given a monthly salary of 5 coins.

1. Money is a medium to buy things we desire most

My nephew really wants a dog. With his first salary, we tried to maneuver him to buying gifts for his parents. He still chose to buy an imaginary dog with the money claiming it would be a good gift for them.

2. Saving money does not come naturally

When we pushed my nephew to save for his college fund, he said he didn’t want to. When asked why, he actually said that he then wouldn’t be able to spend money to buy things. We were finally able to push him to keep aside the money.

3. Once you start, savings can become a habit

Once, however, he put the first coin aside from his salary for savings, going the pay yourself first route came much easier to him. It almost became like the Pavlov’s dog syndrome where the salary became a trigger to put money in the college fund.

4. With your money, you end up rationalizing everything

When there is no opportunity cost to the money (like when your parents spend for you as a child), you want everything. However, when you realize there is an opportunity cost to the money that you have, you try and rationalize spending lesser and lesser. So, my husband gave my nephew 2 options – unhealthy dog food for free or healthy dog food for 1 coin. Initially, he asked for the unhealthy food. With a little push, he gave a coin for the healthy food. We then told him it was his birthday and for a party, he could take his friends out for pizza for 1 coin or for pizza and bowling for 2 coins. He was sure his friends would get only pizza.

5. We all want to borrow when we don’t think of the cost

At one point, looking at the large pile of coins on the table, my nephew said he wanted to borrow money. That was the time we told him about the cost of borrowing and didn’t really let him borrow.

The game was pretty short-lived as our wait time wasn’t too long. I think one of the things I wish I could have added was getting him to put aside money for philanthropic purposes.

What did you think of the game? Observed any money patterns from the children around you? Let me know in the comments or email me at aparna@elementummoney.com