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Financial independence: The best gift for your child
Published On , 14 Nov 2018 By TT Connect
As a parent, you want to see your children grow up to be financially independent individuals. You are probably working round the clock to ensure that they get good education. You are saving for their future too. But, not many schools teach children about money that early. You may want to take the initiative now.
Here are ways you could make a start:
Begin with the saving habit
It’s never too early to inculcate the habit of savings in your kids. The good old piggy bank can be your trusted aide.
Even before they know how to count money, encourage your kids to put the money they receive as gifts into their piggy banks.
Empowering your child
When your kids are solving basic math problems at school, introduce them to the concept of a savings account. Use the opportunity to introduce the concept of interest rate.
Leading banks have special accounts where your children can have their own debit card, that gives them a sense of ownership and responsibility.
The need to invest
When your children enter their teenage years and have a fair understanding of money, teach them that the money lying idle in a savings account will lose its purchasing power, thanks to inflation.
Introduce the concept of investing and setting Goals at this stage.
Systematic Investment Plans (SIP) are the best, to begin with for young children as they can begin investing in their future with only Rs.500.
Encourage them to tie this SIP to a particular Goal like the celebration of a milestone birthday.
Be the wind beneath their wings
While you are teaching financial independence to your child, you need to instil confidence in them that you are doing your bit to secure their financial future.
Education is costly. Show your children that you are prepared by investing regularly to help them pursue higher education in their chosen field.
Introduce them to the schemes and explain the way they work for them. For example, Children’s Fund – a solution-oriented Mutual Fund matures after 5 years or after your child attains the age of maturity, whichever is earlier. Such long-term investments help you meet long-term Goals.
Set an example by showing your portfolio and explain how different investments meet different Goals at various life stages.
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