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Personal finance for Teens



The sad thing about today’s teens is that they are well versed and extremely knowledgeable with science and technology, but they are shockingly ignorant when it comes to what they know about personal finances.

Here are a few important morsels of personal finance that you must teach your teens.

1.       Starting Small and Early

The price one pays for delaying investment steps is quite huge, and make sure that your teen acknowledges this fact. Ask them to start early – even if they start with quite small amounts, its fine. But you need to ensure that your teens have a healthy attitude and a ton of patience when it comes to managing their wealth.

2.       Standard of Living

Talk to them about what your family income is, the family budget and investments. Express whether you can afford to pay her education, hobbies, and marriage expenses. Many parents do not discuss these things with the kids, the results of which can be fatal.

Your teen needs to know whether a 30 lakhs per year college is a possible or an impossible demand.

3.       Compounding and Saving

Your teen might have learnt about compound interest at 7th standard. Leverage on that and encourage habits of saving and having goals. 

The magic of compounding and its amazing results will give them a glorious start. The earlier they discover the avalanche effect of compounding, the more they will be able to make their money work for them.

4.       Investments

Talk to your children about all the investment plans you have taken, and why you decided to go with them. Investment and finances should become a family lingo. 

Impart the knowledge that with great risk comes great reward and that patience is always the key.

Yes, we agree that discussing finances with teens can be a tough step. It has to be done flawlessly, with accurate logic and facts, and as minimum emotions as possible.

But remember, no great financial advisor can do this better than you, as a parent can.

Read Also THREE MAJOR RULES OF PERSONAL FINANCE

 

Written by: BALAKARTHIGA.M  



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