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