It all started with a conversation. “Kshitij I have no money”, told his mother. I want “Let’s go to the bank and get the money “, Shrishti told her a toy!! mummy. “It’s so simple”, continued Shrishti, “you go to the ATM machine, put the card, tell how much cash you want and you get it”. “No, no darling. Bank is only a place to keep money. Papa goes to office and he gets paid at the end of the month. That money goes to the bank.” “Just like you pay Gauramma to clean our house and vessels”, said Shrishti.(is this a question?Then: “Just like you pay Gauramma to clean our house and vessels?”, asked Shrishti. ) “Yes”, said my mother, “Papa works hard, so that we can have a good life.” “I don’t need so much money and I love it when Papa plays Suduko with me”, said Shrishti. “Okay darling, Papa will not go to the office from tomorrow”, said mummy. “Tomorrow I shall ask Gauramma not to come to our house for cleaning. Mummy will clean the vessels, Shrishti will clean the house. No money; no Gauramma.” “But mummy, I have to go to school”, said Shrishti. “Sorry beta, no money, no school. To study in school, one needs to pay school fees. And also, no newspaper from tomorrow, no money, no newspaper”, said mummy. “You need money for all this!” exclaimed Shrishti. “You need money to pay for vegetables, to buy toys, to pay for services like the maid, the driver”, explained mummy. “Hmm, if we need money, why don’t we open a shop like supermarket, then we can sell things”, suggested Shrishti. “It is not so simple to open a shop. Tell me, where will you open the shop, how will you get the things to sell, how will you get people to buy from your shop?” asked mummy. Fortunately the bell rang and I, the mother was saved. The kids ran off to play and I started thinking: should I explain to my kids about money? They think parents are their ATMs (Any time money) or that money grows on trees. My first question was: Should we teach our kids about money? “Money is one of the most important subjects of your entire life. Some of life’s greatest enjoyments and most of life’s greatest disappointments stem from your decisions about money. Whether you experience great peace of mind or constant anxiety will depend on getting your finances under control. -Robert G. Allen.” Money has an important place in our life. In school we are taught so many subjects but none of them is related to money. Yes, we do learn about Profit/Loss, Simple Interest/Compound Interest, but in school,l we are more concerned about solving the questions, but by and large, we pick up information about money from our parents. There are two ways of looking at teaching kids about money: Many people feel that we should not speak to children about money, as they feel they were not taught about the same by their parents. They learnt it as they were growing up. There is another group of people that feels that children should be spoken and taught about money. “Rather than give a hungry man a fish, it is far better to teach him to fish for himself, then he will have food of his own for lifetime” We are hearing about job cuts, recession, salary cut, and stock market collapse almost everyday. These problems have risen because of the sub prime mortgage. This shows that the world is flat or as they say, “When America sneezes, the world catches cold.” There have been lots of stories about how people are reacting to the economy slowdown. It reminded me how important it is for individuals to be financially literate. We start learning ABC at the age of around 3 or 4 and when do we learn about finance? I remember how my hands shook when I had to write my first cheque or when I started earning money. My investment decision was to give my money to my parents so that they invested it on my behalf. How I wished that someone then could have explained me about the basics of money. I felt that forewarned is forearmed and so decided to explain to my kids about money. I searched the internet looking for information but most of the information was related to the sites in US and it was very spread out. So, I decided to write this book. This book is my humble attempt in explaining the concept of money to my children. This book is my tribute to my parents and in-laws who have had a great influence in my life. What is Money? .................................................................................................................. 4 Money ............................................................................................................................. 4 Money Cycle ................................................................................................................... 5 Purpose of Money ........................................................................................................... 5 How important Is money? ............................................................................................... 8 Indian Currency .............................................................................................................. 9 Bank Notes .................................................................................................................. 9 Coins ......................................................................................................................... 13 Indian mythology & money .......................................................................................... 17 Lakshmi..................................................................................................................... 17 Kuber......................................................................................................................... 18 3 What is Money? Money Let me ask you a question. Do we need money? If yes, for what? Well, we need money to: Buy things such as food, clothes, cars, CDs, books etc. To pay the maids, the milkman, drivers, doctors, to pay for school fees etc. To go to restaurants, movies, travel etc. Without money, one cannot eat, one has no place to sleep,one cannot have clothes. Money pays our bills, it buys things for us. So what is money? When asked there are varied answers. Rupees Coins Money in the piggybank Money in the bank Cheques Gold Silver The truth is, money does not have to be paper money and it does not have to be coins or gold or silver. Throughout history, a wide variety of items such as large stone wheels, tobacco, beer, dog teeth, porpoise teeth, cattle, metal coins have served as money. “Money does not occur in nature. Money like language is uniquely human” ---Jack Weatherford If money can be anything, then what is the basic purpose of money? It is a medium of exchange; anything that enough people will accept as payment for something. As people use money to buy, it passes through many hands including 4 individuals, businesses and banks. When one person or group spends money, another person or group earns money. Money is moving in a never ending cycle just like the water cycle which results in clouds. Money Cycle Let us say Ishani is going out with her parents to buy a dress. Before going to a mall, Ishani’s father goes to the ATM to withdraw money and give it to his wife. Ishani goes to a mall with her mother, chooses and buys an awesome dress for Rs 1000. Her mother pays money to the shopkeeper, Mr. Shyam. When Shyam goes home that night, he needs to fill some petrol in his car. To pay for petrol, he uses the money that Ishani’s mother gave him. Arjun, the owner of the petrol pump buys vegetables with the money he got from Shyam, who got it from Ishani’s mother. Shyam gives some money to his child Rita & some to his wife Sunita. Rita puts it in her piggy bank. Next day Sunita pays electricity bill and goes to the bank to deposit the money. She also buys a new computer game for her son Ishaan. This game was written by MySoftX Company. MySoftX has a lot of people working in his company who make games. Ishani’s father is one of them. At end of the month, the salary for Ishani’s father is deposited to his bank account. So you see, money is always on the move. Why did Mr Shyam accept Rs 1000 from Ishani’s mother? Because he knew that he can use it later for buying or paying for services. So, money is nothing but a medium of exchange. What if you convince Mr. Shyam to accept your doll/cricket bat/drawing for the new dress? Then, the doll/cricket bat/drawing is the money. Purpose of Money So, what is money? Money serves three purposes: Medium of Exchange People accept money to buy goods and services. It should be portable or easily carried from place to place. Can we use rocks as money? No, as they would be so heavy to carry from one place to another. Money must also be divisible. What if you want to buy a candy worth 50 paisa or Rs 1? What if the chocolate is for Rs 10 but you have Rs 50. Then you should be able to get Rs 40(50-10) back. Money should be available in different denominations 5 Standard of Value People measure the value of a service or good with money. For example, price of 1 kg onion is Rs 15, while one Barbie is Rs 400. So, which is more expensive? A dress costing Rs. 1000 is worth twice as much as another dress costing Rs 500. Store of Value Money can be saved and used in the future. If you put Rs 5 in my piggy bank and then take it out after a month or a year, you would be able to use it. To be a good store of value, money must be durable. Can we use tomatoes as money? N,o as tomatoes will perish after a few days. Across the globe and in human history, different things have been used as money such as sea shells, cows, cigarettes, tobacco, beads, chocolates, metals like copper, nickel, gold, silver & paper.