Monday, April 23, 2018

Book Nook: Liktoon's Boat

Fnancial expert, blogger, mom and author, Radha Rai wants children to understand from an early age what money is, how to earn it, where to grow it and how to spend it.
I had a chance to read her new book, Liktoon's Boat. It provides basic financial concepts like saving for a goal, and profit as sales minus expenses. It has simple language, a clear plotline, and bright illustrations to be engaging for elementary kids.

I had a chance to interview her to learn more.

Why did you decide to write the book?
Finance and financial instruments are becoming more complex everyday. A common person with no formal education in finance struggles to grasp the complexity of financial ecosystem around us. Even the smartest and well educated people - doctors, engineers and teachers end up making bad financial decisions. For example during financial crisis, many people stopped investing in 401K even though they had stable source of income. Less money savvy adults implies more debt, more bankruptcy and a struggling generation which impacts the whole economy. So how do we fix it?

We could teach adults financial concepts, however, they are busy with other things in their life and aresearch by Cambridge University shows that by the time a kid reaches adulthood he or she has already developed a certain financial persona. So he or she would have to unlearn and relearn everything. This is inefficient. Instead, I wanted to start teaching financial concepts when the future generation is still young and malleable. If we can teach kids about physics and math then why not about money? 

I feel that money savvy kids make financially responsible and financially successful adults. That is exactly what I aim to do with Liktoon & Ge’s adventure series through engaging and easy to follow story lines. 
How can books be used to help teach kids about money?
Liktoon’s Boat is not only a magical adventure filled with colorful illustrations – it’s also a fun introduction to concepts like earning and saving money for a goal. Liktoon dreams of exploring the ocean, but he doesn’t have a boat. With the help of his friends, he sets out to make his dream come true. Each enchantingly illustrated page focuses on actions, decisions and emotions that Liktoon goes through in the process of achieving his goal.

In addition to helping children with their reading skills, this book introduces the important topics such as:
  • Addition and subtraction
  • Earnings and savings
  • Delayed gratification, perseverance and teamwork
  • Business principles such as entrepreneurship, profits and expenses
Liktoon's boat, uses bright colors, and familiar topics like stories, toys, and friendships to provide introduction to basic mathematical and financial concepts

What are some things that parents sometimes forget when teaching kids about money?
Kids often subconsciously observe adults making financial decisions every day, whether it’s paying for gas, shopping, or going out to eat and this observational learning is often suboptimal. Hence, if parents are actively teaching their kids about money, then kudos to them, they are already ahead of the curve! Regular money conversations with the kids are one of the most important ways to continually introduce them to different aspects of money - earning, saving, borrowing and budgeting etc. However, the two important topics parents often overlook while teaching kids about money are - growing money and saving for retirement.

Learning about “growing money” is very important for future wealth accumulation. The key is to start children learning about the magic of compound interest as soon as possible. Compound interest gets maximised with “time” and that is exactly what kids have a lot of. There are several ways to accomplish this, one way to start is by giving a “penny” as interest everyday for every dollar the kids have saved. As the kids grow older, parents can open a Roth IRA account for their children so that the children can learn and understand the power of compound interest. As the children invest their savings in the Roth IRA and watch their savings grow, they will also get a headstart in their retirement savings.

For young children, the concept of retirement would be hard to fathom, however, this is the time to lay down the foundation for future retirement related conversations. As they grow older, the next step is to introduce the children to the concepts of allowance, budgeting, retirement and living within one’s means. I play a game with my 8 year old niece to introduce her to the importance of retirement savings and to practice saving for retirement. I give her a small allowance every month and she generally has full freedom to save or spend it. She however needs to disclose how she is spending this money to me every month. Then, once or twice a year, we have a retirement month when this allowance is skipped. My niece has to now manage during these retirement months without her allowance. After some initial shocks, she has gotten really good at saving for the retirement months in our game. The hope is that when she goes into the outside world, she will use these concepts to make wise decisions regarding her retirement savings.

Radha is also a financial professional, community volunteer, author and entrepreneur, having earned her MBA from The University of Chicago, Booth School of Business. She was born in Bihar, India where she had to go against the societal grain to get herself and her younger siblings educated. Liktoon's Boat takes children of all ages to a make-believe world of adventure, entrepreneurship and challenges, where dreams are accessible with the right financial planning.

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