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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.