Saturday, July 29, 2017

Parenting Series (5/5) - Financial Literacy (money management, a life skill approach)

There are many memories from college days, which stays with us for a longtime. Among them, one of my memory is of a classmate who used to maintain an Expense Log Book, keeping a track of his monthly allowances (pocket money). (We were in a residential program, living away from our families).

It has taken me two long decades since then to today, to fully appreciate my classmate's good money management skills & habit (maybe being a parent makes you wiser). Ironically, during our college days, most of us felt his daily ritual of accounting was overtly practical & boring. For us, college days were supposed to be carefree & careless. Running out of our pocket money by middle of the month, phir wohi udhari, len-den :-) (borrowing & lending), eagerly waiting for next month's money transfer & the cycle continued. In fact, by end of the academic year, our entire friend circle would be in debts :-).
In contrast this classmate of mine, would always have money in his bank account. Let me explicitly mention, so that one does not assume him to be a miser or a rich guy. He too enjoyed - watched movies, went to eateries, pooled in for birthday parties, joined us on excursions etc, all well-managed within his reasonable monthly allowances (pocket money). On top of it, he was our go to person (money lender) when we used to run out of cash (he financed us, without any interest %) ;)

After graduation, we all took different paths & we drifted away from our friends....knowing such intimate friendship would never be forged again in our adult - professional life.

In this new phase, with no best buddies around, it becomes a necessity to suddenly switch over from being careless with money to becoming careful & methodical with money management. Unfortunately, for many of us this transformation does not come naturally. For years our orientation towards money management has been random & lacked awareness. It's an uphill task to expect an overnight 180 degree turn in our conduct, from campus life to professional life.
In reality, our money management skills & habit, may take years to reach an optimal level & sadly for many of us, it may never transcend to the highest level of wealth creation.

At a fundamental level, my personal experience touches upon two key aspects:

1. Kind of people (students): 1st kind - Financially Literate (optimal money management skills/habit) & 2nd kind - Financially Illiterate (sub-optimal money management skills/habit).

2. Why Financial Literacy levels are different among people (students)?

In my opinion, the answer to Why Financial Literacy level differs? can be found in our approach towards parenting. And Financially Literate or Illiterate, is just an outcome of our approach towards parenting.

Think about it!

Our parenting style does not originate out of thin air, isn't it?
Rather it is deeply rooted in our socio-cultural-belief systems & it manifests itself from this paradigm.

Referring back to my personal story, during my growing up years my exposure to managing & understanding money (financial literacy) was negligible. Reflecting back, I realise it was a natural outcome of my socio-cultural background & my upbringing in a Bengali educated-working-middle-class family background.
Financial illiteracy during growing up years is not just limited to my personal experience, rather this is a typical scenario a child experiences during their growing up years, in an Indian educated-working-middle-class-family background.
Our Parenting approaches are more focused on formal education, good marks, entrance examination & aiming for a good job. In this road map of upbringing our children, sadly imparting life skills - Financial Literacy, is excluded from the syllabus.

Let's ask ourselves, what are the consequences for being Financially Illiterate?

Well not a rosy picture - financial bad habits, debts, low on savings & investments, risks not covered, no financial goals, forever dependency on job, lack of wealth, not achieving financial independence......a gloomy list!.

As a matter of fact, for our future generation, Financial Literacy will become far more important than ever before. Our children are going to live as adults (working professionals) in a future economy (world), which probably would be more uncertain & fast-paced change would be the only constant. Consumerism, targeted marketing (data analytics), push for instant gratification, easy loans, EMIs, spending through apps, digital wallets are going to be their constant companion. Therefore, Financial Literacy is a necessity for today's children & should be inculcated through their growing up years, before it's too late.

By being little creative, as parents we can develop 'N' number of ways to introduce Financial Literary (money management concepts) to our children. Listing out few broad approaches, in this direction:

  • During Late childhood (approx. 6 years to 12 years)
  1. Inculcation of Numismatics (coin collection) hobby in our children, is an interesting way of raising awareness about money/currencies.
  2. Piggy bank - introduces children to concept of savings & delayed gratification.
  3. Introduce children to concepts of M.R.P. (price), quantity (weight, ml), expiry date, best buy options, verifying bills etc. A fun & effective way of doing this is through experiential learning. Give them opportunity to shop, make payment, check bills in super-market/shops, under your guidance.
  4. Give them understanding of household cash flow (i.e. you work to earn money). So that children don't assume for long, ATM machines are Santa Clause in disguise :-)
  5. Introduce children to different modes of payments (hard cash, online, digital, cheque, DD etc)
  6. Opening a minor bank account, introduces the child to simple concepts of banking. Guide them to put their money in their bank account (e.g. their piggy bank collection, money they received as gifts/blessings during birthdays, festivals).
  • Adolescence (approx. 12 years to 16 years)
  1. Giving children pocket money (weekly/monthly allowances) & offering them basic guidance on how to effectively manage their expenses, within their budget (allowances). 
  2. Encouraging children to keep track of their allowances. As parent, you can go through their expense tracker on a periodic basis. (the idea is not to scrutinize, but to engage with them in a dialogue & help them learn best practices)
  3. Gradually & systematically, introducing our children to advanced concepts: Investments, Risk covers, Loans, Assets-Liabilities, Tax filing, Financial goals etc. You can offer them experiential learning by involving them in your regular finance management practices.
  4. Encouraging children to think, to ask questions, & to express their opinion. (Don't super-impose your thinking about money on them. The idea is to educate & empower our children by making them well-informed & not to sub-consciously super-impose our socio-cultural-beliefs of money on them).
  5. Last but not the least, the most difficult act - being a good role model :-) Children learn by observing. All the above strategies would be less effective, if they see us walk the talk. We will have to lead by example.

Food for thought!

All of us teach our children, 'HOW to earn money', by educating them to become independent working professionals. Unfortunately most of us, don't teach our children, 'WHAT to do with money', once they start earning!

Thursday, July 20, 2017

Decoding Advertisements: Cocktail of Emotions

Image courtesy: Psychologist world (no copyright violation intended)

Our species, scientific name is Homo Sapiens.

The literal meaning of Homo Sapiens is Wise Man.

In this meaning, lies the satirical humour. Though we would like to believe we are wise, rational & make decisions based on deep thinking. The reality is by & large, we are driven by our emotions & feelings. Modern day Neuroscience, research studies in Behavioural Economics have exposed our irrationality & made us aware that our emotions overrides our rationality.

Let's look into the origin & meaning of the word Emotion.
As we can see in the below image, Emotion originated from Latin & French words which meant 'move' & 'excite'.
In the context of English language, Emotion means strong feelings, which drives us towards an action/thing/goal/behaviour.

Understanding Emotions a bit more: Emotions has a broad range & have many facets to it, intensity, time-span, explicit-implicit, verbal-non-verbal, cultural etc. For the sake of simplicity, let's fall back on the landmark study 'Constants Across Cultures in the Face & Emotion, by Ekman & Friesnen, W.V.' 1971 published in Journal of Personality & Social Psychology.

This study has shown, there are Six universal emotions which are recognised by all, across the globe, across all cultures. These six universally recognised emotions are:
  1. Happiness
  2. Sadness
  3. Anger
  4. Disgust
  5. Surprise
  6. Fear
The above landmark study was published in 1971. Since then till today year 2017, we have come a long way. With advancement of neuro-imaging technology, Neurosciences & Behavioural Sciences research has provided empirical evidences on brain-functionality (emotions & decision making).

These growing knowledge is finding application in several areas, just to name a few: Education & Teaching methodology, Policy making, Organizational/HR practices, Advertising & Marketing.

Let's take Advertising & Marketing, as a specific example. At this juncture we need to recognise, we are living in a consumption (consumerism) economy. To keep the consumption & hyper-consumerism galloping, advertising, selling, branding & marketing are deployed by companies to push their products & services. Infact, we find ourselves surrounded by advertisements - outdoor (billboards), print-media (newspaper, magazines), social media (FB, Youtube), TV, Apps, Radio/FM.

The knowledge of how emotions/feelings drive buying decisions & behavioural changes in a consumer, forms the core of an advertising strategy. Advertisements brings in these emotions into their story telling, which resonates with the audiences at an emotional/affective level. These feelings & emotions, sets the consumer into an act of buying, upgrading, change in behaviour.

A short video from Brand Equity show on ET Now, elaborating the above point: (Emotions behind the consumer buying decisions)

Examples of advertisements deploying these Six universal emotions in their story telling:
  • Happiness: Coke ran an ad series with tagline 'Open Happiness'. The ad associates the product (Coke) with the emotion/feeling of Happiness, in the consumer's mind. Hence for happy occasion like reunions, family get-together, celebrations, festivals etc the recall factor for Coke is high in the consumer's mind.

  • Sadness: HDFC Life ad series #memories for life, weaves the emotion of sadness into their story telling (portrayal of family members missing their dear one, on their special days). The insurance advertisement effectively uses sadness to make the consumer think - emotional loss can't be compensated, but at least one can leave behind financial independence for their family, God forbid if something untoward happens.

  • Anger: Policy Bazaar ad series 'Cancer se Ladai mein Insurance kaam aayega', depicts a cancer survivor, in anger (resentment) inspite of complete recovery. He is angry on himself, because he didn't purchase the insurance policy & he lost his life's savings for meeting the treatment cost. His anger (resentment) makes the audience think, what if this happens to me?
  • Disgust: In general, disgust being such a strong negative emotion advertisers are averse of incorporating it in their sales pitch. However, Govt. Campaigns which are targeted for social changes, behavioural changes, includes disgust to make their story telling more compelling & hard hitting. In these campaigns, disgust evokes a strong aversion in the mind of the audiences & makes them to critically introspect on their own behaviour.
Example, Anti-smoking campaign which portrays a disgusting deteriorating health symptoms (coughing) & a smoky, gloomy, unhealthy public place (canteen).

Example, Swatch Bharat campaign which portrays disgusting behavior of people, mindlessly throwing garbage, splitting, at public places, which causes the Lakshmi (Godness of wealth) to go away from these people's home. In Indian cultural context (religious), linking disgusting behaviour of garbage dumping & Goddess getting angry, will seed a thought in the audience's mind.
  • Surprise: Several jewelry companies, incorporate the emotion - surprise, into their story telling. The protagonist (giver) surprises his close one (e.g. spouse, partner, friend) by giving them a gift. The receiver expresses joy, happiness & feels elated upon receiving the surprise gift. Such compelling narrative, has the power to make the consumer replicate similar gifting behavior, for their loved ones.
  • Fear: Once again, in general fear being such a strong negative emotion advertisers are averse of incorporating fear in their sales pitch. However, fear is used specifically for specific segments e.g. OTC medicines, Insurances, Safety gears (helmets) etc. Fear is also incorporated for Govt campaigns which are aimed for social changes, behavioural changes. For e.g., campaigns for filing tax, campaigns for preventive health measures etc. Below is the link for advertisement. It's story telling narrative, portrays a daughter's fear for his father's (a small time farmer) well-being (what if there is no rain & he is in debt?). This fear leaves a lasting impression in the mind of the audience & they are able to appreciate the importance of the product (skymetweather), which offers real-time weather information to the farmer, assisting in his farming practices.

I hope this blogpost, has helped to some extend in raising understanding about how & why advertisements deploy emotions. In this concluding part, let's briefly look into the application of this Knowledge:
  1. Being self-aware advertisements appeal to our emotions & feelings. This self-awareness, puts rationality back into our decision making process.  
  2. Consumer (audience) can use their wisdom, to understand which advertisement has a positive influence (e.g. adapting healthy foods based on ads) & which advertisement has a negative influence (e.g. overindulgence, overspending). This understanding offers an opportunity for making well informed decisions.
  3. Children, teenagers are more gullible to advertisements compared to adults, due to their limited awareness & maturity level. As parent/guardian, we have a responsibility to raise awareness among children, teenager & guide them during their formative years. After all, today's children, teenagers are going to live their entire life in this era of Big Data, IoT, Social media, Digital & Vritual world. Therefore, knowledge of Behavioural Sciences is going to be a key life skill, for today's children, so that they can nurture their well-being during their adulthood!    

Tuesday, July 11, 2017

Parenting Series (4/5) - Jab Self-Control ho Out of Control....

Aal Izz Well mantra, jab life ho Out of Control :) (Image courtesy: 3 Idiots movie)

Jab life ho Out of Control, toh hoton ko kar ke gol.............Aal Izz Well :)

A simple yet profound philosophy, told in the song 'Aal Izz Well' from 3 Idiots movie.

In a nut shell: Life in or out of control, is dependent on random events, on which we don't have direct control. Hence no point in fretting about it, instead let's have a positive self talk - Aal Izz Well... & face the challenges in life head on.

However, when we withdraw from the outward world & look inward, we can start singing a similar rhyming song: Jab Self-Control ho Out of Control...... but in our right senses, we will fall short of concluding the stanza - Aal Izz Well.


We can attribute life 'in or out of control', to random events which our beyond our direct control. Hence we can try to make peace with the situation at hand & deal with it with positivism (aal izz well).

However, the attribution of Self 'in or out of control', ends up only with self (ourselves). Hence, we can't pass on the buck & have a pep talk. The only two possibilities left for us are - self acceptance of our own flaws or to take ownership for self-improvements. All of us know, these are easier said than done.

Image courtesy: 

Before we even embark upon the uphill task of dealing with the issue of our self-control, let's first evaluate the need for self-control, by exploring it's relevance & it's pervasiveness across various dimensions.

Relevance: (listing out few of the direct outcomes of lack of self-control)

  • Addiction
  • Hyper consumerism (impulsive buying, wants over needs)
  • Eating disorders (over-eating, imbalanced towards junk/fast food)
  • Inappropriate social behaviour (inability to manage emotions)
  • Delinquency (wasting time in unproductive activities)
  • Mis-management of personal finance (instant gratification - spending over savings/investment) 
  • Mis-management of self (inability for time management, discipline)
  • Lack of focus towards achieving one's goal (inability to avoid distractions, impulses)

On mapping the above list of relevance, it becomes alarmingly evident to us, the issue of lack of self-control is pervasive, i.e. percolates into every dimensions of our life. Health, Emotional well-being, Social life, Career (profession), Personal life (as an individual, in a family unit), Financials, Academics, Success & Failure.

When an issue has such high relevance & is all pervasive, it should be dealt proactively. 

The concept of self-control, it's dynamics, it's relative strength among individuals etc are a complex myriad of topics. With the objective of drawing one simple, practical lesson, this blogpost is focused on 'Parenting strategy for developing Self-control in children'.

Cartoon depicting Donald Duck's challenge as a parent, in instilling self-control in his child

Sharing from my personal experience as a father, in our home there are occasional instances of my son (now 8 years of age) overshooting his pre-determined screen time (half an hour per day). The typical scene would be, he will ignore our reminders, he will say "the game is almost over", "the game is just about to get over, wait", "2 minutes"! If pushed a bit harder, tears, tantrums & resentment are quick to follow. Last week, one such incident went a bit out of hands. He was not at all receptive, he refused to listen to us, was crying, showing frustration, anger & was desperate to take an additional 15 minutes of screen time. As a natural reaction, my wife scolded him & she stood her ground turning a blind eye to his tantrums & tears.

I am not debating on right or wrong approach, rather just speaking from my own personal experience from my growing up years: yelling, punishment, threats, supervision, external control do not yield long-term gains. These approaches produces temporary results, but it is associated with collateral damages: emotional drama, adverse affect on parent-child bonding, the foundation of self-control is not put within the child, rather the controlling is driven from outside supervision (parent/guardian).

Just look at the above mentioned list of relevance & pervasiveness - it spans across lifespan & percolates across all dimensions of life. Can we parents, all the time hover over our children supervising them?  The answer is obviously a Big No. 

So what is the answer, for dealing with our children, jab Self-control ho Out-of-control?

At the risk of sounding cliche, let me quote the answer "Responding & not Reacting".

Development of Self-control within a child is to be looked as an organic process & like any organic process, it takes time & takes efforts to nurture it. 

One of the practical tool for instilling self-control in a child is making use of 'Parent - Child Behaviour Contract'. (Google search will provide you lot of free resources (templates) for Parent-Child Behaviour Contract). 

The principles of contract as we know in adult world remains the same, when it is used in parent-child scenario. 

Let's ask ourselves why contracts works in adult world? Or why we follow contracts as an adult?
When I as an adult enter into a contract with another individual or an organisation, there are terms & conditions, which are jointly discussed, reviewed, mutually agreed upon. There are consequences (gains & penalties) attached with the contract. Since I am involved in the contracting process & I voluntarily agree & sign, I am internally driven to abide with the contract. 

This same logic translates to the child, when they enter into a parent-child behavior contract. The child is in discussion mode with the parent in a cold emotional state (when there are no emotional tantrums ongoing). Hence the discussions, questioning, clarification, mutual agreement etc are based on logic, mutual love, respect & understanding between the child & the parent. There is no upper hand, rather the child & the parent are equals. Thus the child is more likely to exhibit intrinsic self-control (desired behaviour), while in real time action (i.e. lives up to the spirit of the contract).

Coming back to the issue I shared about my son & his undesirable behaviour of over-shooting his screen time while playing video game. On that particular day, to avoid the reaction (tantrums) & to move towards a responding mode, I made a one time, brief behaviour contract with my son (image shared below).

Parent-Child Behaviour Contract (video games) between me & my son

I agreed upon giving him additional 15 minutes of screen time & we mutually agreed upon the consequence (if he does not stop after his allocated extra time, he misses out on playing video games for two subsequent days).

Since this approach is scientific in nature (behavioural science), the probability of it's success is high & it did work for us on that day.

The plan for us now, is to have a longer contract with our son on his video game usage - pre-determining the screen time/per day & incorporating some rewards (milestone based) & penalty (outcome based). Over a period of time, when his self-control grows stronger, the contract can be modified or scrapped. And as necessary, we can forge a new contract for a different problem at hand. I am sure, such problems will be in abundance, it's part & parcel of parenting :) but it's fun! It's a journey of learning & growing together.

Note: Images from internet search, no copyright violation intended.