2022

As kids what is the one piece of advice you often receive about money from elders- Use it wisely.

Does it mean to use it sparingly? Or are they expecting you to spend less and save more? If that is the answer, then how much should you be spending and how much should you save? Should you spend less and save more?

There are way too many questions and opportunities that arise when we start to think about money, and all of this puts you in a pickle. It gets confusing to choose amongst the multiple investment avenues and decide what is best suited for you. Why is it that everyone around you put so much emphasis on money and the saving part of it?

We hear a lot about savings and how to do so day in and day out, but what does that mean and why is it the most important thing in life.

The first and foremost step towards learning about the importance of money is to acknowledge and accept the below-stated points-

1. It has become more than a necessity.
2. It is a crucial parameter that tells a lot about the standard of living of an individual.
3. You must work for it.

Using it wisely is an advice that would have worked for the millennials who, as kids were naïve and indifferent to the tips and tricks of managing money.

For the Gen Z who are technologically advanced and possess a different level of understanding and maturity, the more logical advice would be to use money smartly. When you train your mind to think about utilizing the money available at your disposal smartly, you start to realize that saving is not the only thing out there, when it comes to managing your money. It is just a small fragment of a rather large but easily solvable puzzle.

Do not get carried away and overwhelmed by the volume of content that is available on the internet. It may seem like handling your finances is a task that you will learn once you start earning money. However, that is not true. We are here to assure you that managing money can start at the age of 7. The early you start, the better you will get at managing your money. It is a versatile puzzle for ages 7 and onwards that makes for a stronger foundation when it comes to building a healthy net worth.

We are here to help you solve this puzzle piece by piece.

Let us put it this way, to make money is to manage it smartly. Here we will talk about how there is more to money than just savings and investing it in the best mutual fund scheme or the stock market or opening a savings account in a bank.

Money Management is the trait of a forward thinker. It is an attitude that will help you in the long run. Now when you look up the definition of “Money Management”, this is the simplest definition you get-

Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. (Source: Investopedia)

To put it in simple words, the following “how-to” will help you to better understand the concept of managing money effectively-

Or

The following points will help you to better understand the concept of managing money SMARTLY–

1. Spending Plan – How to minimize your expense?

Planning is an essential part of every goal you set in your life. If you have a strong plan in place and the determination to follow it down to a T, you will be able to achieve every and any goal of yours. A spending plan includes nothing but effective ways of spending money. Do not give in to your desires and spend your money only on things that are essential and that will bring value into your life.

2. Managing Saving – How to maximize your savings?

Not spending money on unnecessary desires now will allow you to save and invest. At your age, you enjoy the liberty of taking risks. Speak to your parents about the investment options available for you to save money. From saving it in a bank to investing in a mutual fund scheme, there are an array of options out there. All you need to do is reach out and grab the opportunities available.

3. Allowance maximization – How to earn above and beyond allowance?

You get a monthly allowance from your parents. There are ways to earn beyond that and the key is to start early. Understand that money will not always be available to you freely like it is now, you will have to work for it in the future. Develop skills that will help you to earn more money. A little chore in exchange for money hurt no one. Help around the house with simple chores in exchange for money.

4. Right Budgeting Technique – How to plan your expenses?

There are several techniques by which you can track your expenses and savings. Effective budgeting techniques enable you to understand where you stand concerning your finances. You jot down your expenses for the month, keep your spending in check, estimate the surplus funds and save for a rainy day. It is as easy as it sounds. Find what works for you and follow it religiously but keep room for improvements.

5. Time value of money – How is starting now beneficial?

This is where the time value of money comes into play. The money you earn now will be of very little value 5 years down the line but the money you save now will give you fruitful returns within a similar timeline. Let us understand this with an example- If I give you Rs. 100, you will be able to buy 10 chocolates for Rs. 10 each now but with the same Rs. 100, 10 years down the line, buying 10 chocolates may not be possible. This is because the price of chocolates may have increased by then. However, the same Rs. 100 invested now in a savings account that gives you a return of 7% will have increased in value 10 years down the line.

6. Learning to build a sound net worth – How to build a sound net worth?

This one is simple and needs no explanation. You follow the above steps with utmost discipline, and you will have a sound and strong financial background. Set a goal for yourself and work towards achieving it every day. Challenge yourself by increasing the amount of money you desire to save every month. Every rupee you save will bring you closer to your goal.

7. Your chance to make smart choices is now! – How will this benefit you in the long run?

If you have understood the significance of effective money management skills, you would have understood by now that the choices you make today will have a huge impact on the standard of living you wish to achieve in the future. Hence, this is the time to make the right and sound choices.

FinStart understands this need to teach kids about the importance of money and how to manage it.

It is a one-stop destination, offering programs for children in the age group of 7-15 years teaching them financial literacy skills.

Contact us to know more.

Kids these days have shown potential to be very fast learners and have a good grasp on things than before. You would have seen kids 6 years of age, efficiently using a phone to see YouTube videos and even download games from Playstore. There is no doubt that a 7 year kid can now understand different things ranging from human emotions, to technology. Parents too never hesitate these days to teach them about concepts, which they never learned until entering teenage. In spite of this, most parents feel that their kids are too young to be taught about personal finances and money and do not involve them in regular day to day finance management, due to which kids do not learn financial sensitivity until much later in their life.

However, many child psychologists and studies have come out to say the exact opposite. One study from the University of Cambridge found that kids are already able to grasp basic money concepts between the ages of 3 and 4. By age 7, basic concepts relating to future financial behaviors will typically have developed.

Lets talk about why exactly does your child need lessons on money and finances at an early age.

1. Difference between a need & desire

Who among us have tried explaining our child that the video game that they are embarrassing us for, by crying in the middle of the mall, is not worth crying for? Usually parents feel, it is baseless to argue and buy the game, but the ones who can’t afford, come up with some silly reason that they have this at their home already. However, how will they get to know the difference between a need and a demand, the importance of prioritizing a school uniform than a video game? How much budget does the family have to spend and how much is utilized in necessary things for survival? Such things when taught at an early age, tends to not only to make a child considerate but also shape their overall personality

2. Financially healthy habits

Maturity doesn’t come with age, it comes with experience. We do not need wait for our children to be 18, to get matured. Early life experiences, teachings and encounters with finance, can make inculcate healthy habits in terms of spending, budgets and savings, by the time he/she finishes school. This way, their financial decisions, after they start earning ought to be sounder than we had taken at 25-26 years.

3. Self Sufficiency:

Even after growing up and earning, most of us struggle to do our taxes, misunderstand investments and savings. These are some very complicated chapters to learn even in our adulthood and we normally depend on someone else to do that for us. Kids need not learn these things in their  early age, but understanding fundamentals of very money comes from, how is it spent and why do we need it can help a child become self sufficient and eases the process of learning profits and taxes, in the later part of their lives.

4. Sensitivity and importance of money

If I got a dollar for every time my parents had taunted me saying that money doesn’t grow on trees, I probably would be richer today. But alas, money still doesn’t grow on trees, who will get me that dollar? The reason our parents use this cliché is to teach us the importance of money and how much hard work and efforts goes into earning a single dollar. Kids have not been sensitized to this subject, as parents usually feel that they are not old enough to understand the significance of money. Sure, they don’t have to dig into IPOs and secondary markets, but who says they would not understand the sweat and work that goes into earning those dollars. The kids would sure be more sensitive in making demands, if they too are equipped with the information of where exactly the money comes from.

5. Setting and achieving goals:

A right set of fundamentals on how money is made, how is it grown, what is budget and what are savings can help a child important lessons on setting goals and the importance as well the joy of achieving them. From small goals in early childhood like saving pocket money to bigger goals in later life like investing those savings to grow money, can be set from very early age to help them make wiser and smarter decisions in future.

There are lot of ways parents can teach these basic life skills to their children. Teaching financial literacy does not necessarily mean to have access to highly advances courses or have educated parents. Parents can simply involve their child in day to day money management tasks, from counting currency notes to having the kid go out to buy some groceries with limited money. Parents can impart lot of these concepts by just sharing their life experiences and by just letting their child be part of routine discussions on budgets and savings.

To know more about financial literacy and how to teach your kids, reach out to us on: http://www.finstart.in/

We all deal with money on a daily basis. Every day we encounter situations of save, spend and share while handling money.

Going by public transport or eating out or helping someone, everything involves money related decisions. Today we are making such decisions, tomorrow our children will face similar decisions in life.

How about we starting to teach them about money from an early age. Research proves that “a child can develop good money habits as early as age seven.” It will not only help them to learn to manage money wisely but will also develop a healthy and positive relationship with money.

When we teach our kids to read, we start with the simple alphabets of ABC. When we teach them about money we start with the three “S” – SAVE, SPEND & SHARE.

Let’s begin with –

Saving

We all know the phrase “A penny saved is better than a penny earned.”

But do we actually practice it?

Saving is difficult, but we also agree it is important. That is why we ensure our children learn how to save. Because children develop habits early in life. Habit of saving is no different.

We can begin their journey of saving by teaching them to always save a portion of the money they receive before spending it all, putting spare change in a jar or save for something they always wanted.

It will help them learn value of money and a habit of saving now.

Spending

Children or adults, everyone likes to spend. We have seen our parents spend money on us and our children watch us do the same. Something which nobody has to teach. One thing we can surely teach our children is it to spend wisely.

We can make them smart spender by teaching them the difference between needs and wants. Suggest them to shop with a list to avoid impulsive buying. Always compare the price before buying. You can also help them to stay focus on their goal.

A good exercise for your children will be to write down their expense every time they spend their money.

They will be surprised..!!

Sharing

We were taught “Sharing is Caring” when we were young and now we pass those lessons down to our children. We teach them to share their games, stationery, food, toys etc. but we don’t talk much about sharing their time and money.

Teach them to donate some of the portion of pocket money or money they receive to less fortunate people or they can go and spend time in orphanages or old age homes.

Sharing is one of the most satisfying and wonderful feelings in the world. Giving what we have to someone who doesn’t have it spreads happiness all around us.

Involving children in the process sends a positive message to them and it gives them the power to spread joy and happiness all around them.

Let’s Start Today!

The best way to teach about money is to give them 3 jars. Tell them to label each jar as: SAVE – SPEND – SHARE.

Whenever they receive money, help them divide the money into these 3 jars. As a family you can decide on what percentage to allocate to each category.

Beginning their journey with such small lessons will result in creation of powerful and positive money habits.

Contact us to know more on financial education for children.

Financial literacy is the ability to use knowledge and skills to make effective and informed money decisions.

Introducing money concepts to our children at an early age will help them grow into adults, who can achieve financial security and success.

What is financial literacy?

Financial Literacy refers to the ability to use knowledge and skills to make effective and informed money decisions.

The Organization for Economic Co-operation and Development (OECD) defines financial literacy as – “A combination of awareness, skill, attitude and, behavior necessary to make sound financial decisions and ultimately achieve individual financial well being.”

What is the financial literacy rate in India?

India is the home to almost one-fifth of the world’s population and has an overall literacy rate of nearly 80%. Yet the financial literacy rate in India is the lowest.

According to a survey conducted by The National Centre for Financial Education in 2019, only 27% of the Indians are financially literate.

Why is financial literacy important for children?

Indian families believe that their children are not old enough to learn about finance.

We live in a world where we do not allow our children to jump into the deep end of the pool before he or she learns how to swim. Nor do we allow them to drive before he/she learns to drive. But we allow them to enter the complex financial world without teaching them basic money skills.

Someday children have to start making basic financial decisions in their lives. Then why not start early. If we teach them financial literacy at school age, it will help them in the long run in making financial decisions.

How to start teaching them financial literacy?

It is said that “parents are the first teachers of their children.”

As a parent, we can start by ensuring our children inculcate a habit of savings with a piggy bank, making a budget, recording their expenses in their diary.

Apart from that, you can talk to them about money, take them to grocery shopping or banks with you.’

However, not all parents feel confident in their familiarity with financial literacy or may not know the best way to introduce various concepts of money to their children.

FinStart understands this need to teach kids about the importance of money and how to manage it.

It is a one-stop destination, offering programs for children in the age group of 7-15 years teaching them financial literacy skills.

Contact us to know more.