Part of taking care of your children also means teaching them how to cope with the various different stresses which come with adulthood. Fathers, often helm the finances of the family, and they should take it upon themselves to teach their children the responsibility of finances from an early age.
"As fathers, we believe it is our role is to guide and be a mentor to our children to shape their values and principles for life in the long run. We immerse ourselves into their lives, focus on their mental and physical wellbeing and stand responsible for their upbringing. Fatherhood has evolved from providing a secured financial future for children, to instilling invaluable experiences that help them become independent and capable of decision making. By reinforcing early positive behaviour and habit formation, parents can foster healthy financial independency amongst their children," states V. Viswanand, Deputy Managing Director, Max Life Insurance.
On the occasion of Father's Day, the expert shares five early financial lessons to pass onto your children that help ensure they have a bright and secured financial future ahead:
Piggybank your pocket money
The first financial lesson to instill within your child is to start saving and planning early. By teaching them to put aside a chunk of their pocket money is a start towards healthy savings behaviour. Over time, as they start earning, these teachings will automatically prompt them to put aside a part of their salary in a savings or a fixed deposit account.
Start smart, start small
Parents must encourage children to be financially smart. While starting early is one step towards financial independence, children must not worry about how little they are putting away. Often telling them that 'Rome was not built in a day' will encourage them to set aside small amounts to gradually build a corpus. After reiterating this, children will eventually learn to budget expenses and savings. A good thumb rule to remember is that 30-40 percent of income must be saved or invested to create a safety net should plans go awry.
Be behaviorally and financially disciplined
Most times, parents worry about behavioral discipline, but forget to equally focus on financial discipline. A strong foundation early on will enable them to systematically work towards their goals and objectives. In fact, prompting them to purchase financial tools such as term insurance policies will require them to put aside premiums every month and start the journey to a financially safe life.
Set goals, save for the long-term
Buying children the latest edition of a play station, a new phone or a laptop will lead them to believe that parents will always finance their aspirations. To nurture financial independency, parents must encourage children to plan ahead, set milestones and work towards fulfilling it.
Do not let fluctuations scare you
We have been told by our parents that life is a marathon, not a sprint. The same learning should be passed on to children of this generation, who easily fall off track because of short-term requirements or indulges. Unseen hurdles are a part of life, but people must always stick to their initial investment strategies. Similarly, stock markets witness short-term fluctuations, but having a long-term mindset will do away with intimidation.
Parenthood prompts fathers to start planning right off the bat, draw up plans and set goals for their children. However, children are sometimes excluded from this. A good start to becoming a financially savvy family is to chart out aspirations with your children, while providing financial guidance through their early years to induce good long-term financial behaviour.