How many of us, especially women, wish that we had someone who taught us about money a little earlier in life? And while social currents have most certainly evolved with time, quite progressively so at that, the topic of ‘monetary matters’ for the most part, seem to dominate a man’s world. Consider our state of affairs on a cross-generational continuum—we continue to see the unjustified nuances and apparent disadvantages that women (especially young women) and children face. Most of whom lack access to credible sources of information on financial standing, well-being, or betterment.
Contrary to popular belief however, teaching your kid about money doesn't directly translate into teaching them how to get rich. After all, we’re not asking you to spoil them—too much! Let’s start simple. Depending on what age your child is and what level of know-how they’re currently at, try to touch upon the areas as listed below by Hena Mehta, CEO and Dipika Jaikishan, COO of Basis- India's financial services destination for women:
1. You're never too young (or too old) to start talking or learning about money
Most folks tell us that if we had to start saving, we should have done so when we were younger. Which is true, but only in part. After all, it isn’t too late, until it is! Educating our children about finance is the first step to rectify an unfortunate and ceaseless trend in Indian society, today. Which means, whether they’re 5 years old and start out by sparing some change for a piggy bank; or they’re 15 years old, and plan to open their first savings account; we say- GET STARTED!
- Talk about why financial planning matters and discuss the reasoning behind your choices.
- Find ways to engage your child, because sometimes it takes some real-life application to get a concept to stick.
For instance, take the power of compounding. Ask your child if they would rather start with 10 rupees and double their money daily for 10 days, or receive 100 rupees upfront. Then sit with them and do the math.
Quick reminder: Delayed gratification + Patience = Bigger rewards. Sounds complex? Well, it isn’t. :) And hey, who knows?! You may pick up a few things along the way too.
2. Lead by example
Children absorb faster than you spend your money. A bittersweet truth to acknowledge maybe, but a highly important one at that. In order to take care of your child, you need to take care of yourself first. Which means:
- Account for your retirement fund, in lieu of your lifestyle.
- Never forget to stash a little something away in an emergency fund.
- And definitely make sure you have sturdy life-insurance policies in place.
A good way to demonstrate to your child the importance of these practices is to, well, practice what you preach! Once they establish the idea of saving before spending, help them translate the above into their versions or types of savings plans. But also remember to keep a little ‘fun-fund’ going for you and your kids, because as we all know, all investment and no spending can make Jill a dull girl.
3. Set big-time goals. Encourage your child to invest, invest, invest!
At the end of the day, you need to know that your children possess the capability to manage their money without anyone's interference. And by advising your child on the importance of investing at an early age, allowing them to make mistakes (which at times could mean, minor monetary losses), and engaging consistently in smart-spending, you introduce long-term planning as a fundamental life principle, as opposed to short-term gratification. It should be considered ‘duty’, as individuals who live in the age of Centennials, to actively:
- Create opportunities for your child to earn money.
- Teach them the value of both giving and receiving.
- Show them how money, when spent the right way, can grow.
As someone so eloquently put it,
A simple fact that is hard to learn, is that the time to save money is when you have some.
So there you have it folks, start talking to your kids about their ‘moolah’ today.
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