Teach your child to start saving at a young age. We show you how you can enable your teen to be financially responsible..
Money management is an essential life skill. It is best learnt, acquired and practised while you're young. Today, teenagers are well-informed, thanks to a multitude of resources at their disposal. They are also intelligent enough to understand and emulate role models such as Warren Buffet, who started earning even before his teenage years.
Teenage is a great time to form habits. A disciplined lifestyle, health routines, eating habits, etc., formed during the teenage years stick with you for life. Money is no different. Financial habits such as trying to earn independently, saving from it for attaining goals, and learning the art of budgeting to get more value from your money should be practised during the teenage years. This creates financially responsible citizens. The culture of financial prudence creates great families, societies and nations.
Also read: Top 20 Good Habits To Teach Your Kids
The first step to become a financially successful teen is to start earning independently. Once you do this, savings, budgeting and investing will automatically follow.
That's not as difficult as it sounds. If a teenager has a hobby and has put in hours practising it, he could impart this knowledge to others and earn money. As he grows and goes to college, a teenager could look for internships, online jobs, volunteering activities, which would pay him money. He could also start to learn financial markets and its various investment avenues and start investing his savings to get higher returns.
When a teenager earns money and doesn't spend the entire sum, it implies that he has saved the remaining amount. 'Savings', however, is very different from investing. If you park your savings in appropriate channels such as stocks, bonds, fixed deposits, mutual funds, etc., you could start earning a handsome return on the savings. This parking of savings for better returns is called investment.
It is not necessary to have a high income to save. It comes from financial discipline and budgeting. If you, as a teenager, decide to set budgets on your expenses on food, shopping, travel, movies, etc., you would be able to save what you desire. This money, when invested wisely, will give you multi-fold returns in the subsequent years.
If you study the life of very rich people, you will notice that they have started earning young. They would also have invested their savings wisely. Today, we are in the digital era where most teenagers have access to mobile applications which can help them learn the art of managing their money. Even the Reserve Bank of India allows children aged 10 and above to have prepaid cards with a top-up limit of INR. 20,000 per month. Parents must allow their teenaged children to use prepaid cards under supervision so that they learn to manage money by themselves. This helps children focus on money management, practise the art of budgeting and become adept at it by the time they start earning actively.
With sound financial guidance and the euphoric feeling of being able to manage their own money, teenagers and their energy can be steered towards practising smarter money habits.
The author is the founder of Slonkit.
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