FirstStep

An experiential exercise to initiate children to the world of Personal Finance

Once upon a time, a child was born in a lovely home with the quintessential hard-working disciplined father, the over-protective mother and the obnoxious sibling; and as the child grows up, s/he realizes quite early and unknowingly in their subconscious mind that it’s not all hunky-dory, and that everyone has to do one seemingly useless activity called ‘work’, for it pays for all of those things that one wants.

We, as parents try to do the same as well; we all want our children to do better than us and get more than what we got. And as our parents, we too have goals, dreams and aspirations and some of us have achieved them, and many of us are working towards achieving the same.


That’s pretty much the story for most of us.

As children, we were always told to evaluate between ‘needs’ and ‘wants’; and that is the understanding with which we all grew up. Some of us were fortunate and some not so fortunate. Nevertheless, our parents made all the efforts to ensure that we get all that we need and want.


Having said that many of us may benefit from a higher understanding of finance. Infact, you would agree that as we grew up, we were exposed to various subjects that enabled us to become professionals and earn money. However, personal finance was not a subject that we got adequate exposure to. And we would have benefitted had we got the correct set of inputs at the right age.

Keeping the same thought in mind, we went ahead and created FirstStep. The design of the program is such that the learning happens on the fly, as the exercise proceeds. Having said that the program has a formal debrief as well. The exercise aims at giving students an exposure in taking decisions about their expenses around their needs & wants, and bank deposits & investments which would fetch them a return. The game expects them to manage all of this for a period of one year (June - May).

The program is divided into four parts.
a. Briefing
b. The Game
c. The Score Card
d. Debriefing

a. Briefing

This section is the most crucial one, as we had to be extremely cautious about the fact that we are dealing with children. While children are quick at grasping, but because it is not a subject that they usually deal with, it takes them that much extra time to get a hang of it. However, thereafter, it is a smooth sail. The biggest challenge is to organise the students into teams of 5 and to get them seated without creating too much of confusion. Each team is to appoint an accountant in the team who interact with the Provisioner. 5 such teams are mapped to 1 provisioner. The provisioner is the person with whom the teams interact throughout the exercise. During the briefing, the children are exposed to 3 critical aspects of the game:

i) Understanding Income, Goals & Expenses, and the rules around them.

Income: The teams start with savings from last year, and they are told that they shall get a fixed monthly pocket money every month.

Goals: Teams have to decide upon two goals that they will have to achieve through the year. They are given a fixed choice of goals to choose from. These goals are things that they may want. However, in all cases the choice are such that the variants of the same products may fall in the realm of 'needs' and 'wants'. For example, in the entire list one could find a low-end mobile phone and a blackberry. The students are supposed to choose a minimum of 2 goals from the list.

Expenses: Students are explained that they will come across some mandated expenses such as canteen expenses &entertainment expenses, and some optional expenses. They have to manage within the budget available. They are also expected to buy two pairs of shoes and the goals have to be purchased within the year as well. For some purchases, there may be bonus points available, and they are a reflection of prudent decisions made.

ii) The activities to be done

To begin with, the students are given an accounting pack which contains the previous year's savings, an blank account book (two pages), pens, goal/expense cards etc.

The steps of the activity per se are fairly simple, however, the managing accounts is seemingly tough because most (~99%) aren't used to and they probably have never seen their parents managing their accounts as well.

Every month is for five minutes. During this time, the students will be shown the monthly expenses (regular / optional)

Step 1: Collect pocket money from the provisioner

Step 2: The participants need to fill up the monthly account statement (Expense, Saving, Banking, Investment).

Step 3: Rush to their Provisioner, pay for their expenses (regular/optional) and close the monthly account statement. Incase they decide to deposit money in the bank or invest their money, they need to collect bank / investment certificates. Incase they buy any of their goals or the two shoes, they need to collect cards against them.

iii) Money Management

This is section which decided whether they make the money or not. Participants have 3 choices for keeping their money. All the modes are completely liquid in nature; that is money can be withdrawn from the bank or one's investments whenever they need. However, interest is applicable monthly and on the money available in the instrument.

i) Cash-in-Hand: Doesn't give any returns

ii) Cash-in-Bank: Gives a return of 0.5% per month, however minimum deposit at one given time is of Rs. 200, and thereafter in multiples of 200.

iii) Cash Invested: Gives a return of 2.0% per month, however minimum deposit at one given time is of Rs. 500, and thereafter in multiples of 500. Investments, in our game, are not subject to market risk!!!

b) The Game

The game is simple to execute. There are 12 months on 12 slides that give them regular & optional expenses. The months are supposed to run for 5 minutes, however, the first three months take about 25-30 minutes, as children need to get used to the idea of filling up their account statement. The image is just an example of how a typical month looks like. The activity to be done is explained in point a (ii).

c) The ScoreCard

This is an important step. While designing we kept two things in mind in so far as the output is concerned; we wanted the children to feel proud of their accomplishments and at the same time get their minds of 'how much money they made'. The scorecard is complicated, however, it is effective in meeting our thought behind the output. The calculations are done manually. At this stage the bonus and interest accrued as a result of deposits in the bank and the investment vehicle are taken into account. Finally the Goal Card is filled up which factors in not only the accruals, but also rewards their work by increasing their asset value and further more uses a coefficient factor to turn the asset value into points. These points help decide as to which team has made more money out of the available resources.

d) Debriefing

The debriefing is important, and the learning needs to be drawn out from what happens in the session, although using the basic framework of questions mentioned below:

i) What was our objective?

ii) Why does the Goal Card give different weightage to goal achievement vis-à-vis cash-in-hand or why is there a different weightage for cash-in-bank vis-à-vis money invested?

iii) How could we play better next time?

iv) How do we differentiate between ‘needs’ and ‘wants’?

v) How is money earned?

vi) What are the avenues of saving?

a) Do you have savings goal?
b) What are the ideas on how to save more?

vii) Do you have your own savings account?

=> What about an Investment Account?

viii) Should we take loans?

ix) What are fixed deposits or Systematic Investment Plans?

=> How can they help you achieve your goals?
=> What do you know about the power of compunding?

At the final stage, we have reiterated that 'Habit comes from Practice', and that the children should discuss their goals with their parents or someone who can & will help them.

As a follow-up of this session, a special initiative for the parents is planned out. Under the aegis of various regulatory bodies of the Financial Services Industry, our organisation, Reliance Mutual Fund has planned an Investor Awareness Program which is essentially a Personal Finance Workshop designed especially for the parents, aimed at

a) exposing parents to the learning that have been shared with thier child, and
b) share inputs with them to establish and manage their personal goals such as children’s education & marriage, their retirement, their home etc by making simple systematic investment plans involving mutual funds.

As a parent myself, I truly believe that this two-hour workshop will help the parents, as a family. Their actions will become a model for their children.

Please send in your feedback & suggestions which will help improve this effort. The pilot program was conducted for 275 students of Ryan International School, Kharghar, Navi Mumbai.

A special thanks to Sumit Kati, Shyamac Jal, Maadhavi Samant and Jayant M Parneria for being part of the team which created the program, and to same set of people and Mihir Shah, Vikram Masand, Gaurav Warman and Krupali Jhaveri for helping execute the program.