The Future is Ours to See

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Sixteen is a crucial stage to be in; and not just because it is sweet.

All those who are 16, or thereabouts, are on the threshold that separates carefree childhood from responsible adulthood. This is also the age when we weave dreams about an ideal future.

Of course, we think of a future where we have a beautiful mix of fame, love, money and other attainable aspects of personal fulfilment.

This is an age where nothing seems impossible and no destination looks too far. We are zealous and idealistic. And no matter how the world perceives our future, we have no doubts that it would be splendid for us.

Indeed, it would be!

Opposed to the lyrics of the popular song, que sera sera, the future is very much ours to see. All we need is the right perspective and a bit of planning to realise all our dreams.

Since becoming rich figures into most adolescent dreams about the future – after all, if you are rich, and have a clean conscience, you earn admiration and love from people around you – it is only wise to do something about it, now!

‘How?’ You would ask. Well, by regularly saving and investing little sums of money.

‘Now that is a bit tricky,’ you would say, ‘Firstly, I have no job, so no income, and secondly, I don’t understand the investment gibberish at all. How am I going to save and invest money at the right place, and that too regularly?’

True, you do not have any source of income as of now. But all you need to save is a fraction of your pocket money. Also, there are investment options, such as mutual funds, where you not only can start investments from as low as INR 500 per month, but also get a professional to handle the complexities of investing on your behalf.

‘Hmm, but how can I invest just INR 500 and accumulate enough wealth to take care of all my financial needs and wants as I grow up?’ you would enquire.

Well, all the credit goes to the effects of compounding. The longer you stay invested, the higher returns you get. And of course, as you grow and start working, you can increase the amount of investments.

‘I have heard that mutual funds are quite a risky affair . . .,’ you say with suspicion.

Yes, mutual funds, like all market related investment options, swing between high and low returns. But the truth is, the same volatility (highs and lows of the market) actually works towards increasing your portfolio to astronomical sums, provided you remain invested for a long time, say over 10 years.

After 10 years from now, you could be a 26-year-old millionaire, when most of the people of your age would still be looking for a job or struggling to pay their bills and repay loans from their starting salaries.

A little financial discipline now can ensure you a future full of possibilities. You can choose a better lifestyle, opt for an alternative career, fund your education or simply roam the world.

While lots have missed the golden ticket to start creating wealth from a young age, you still have the ball in your court!

 

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Distinguishing Needs from Wants

Need vs Want

Call it peer pressure or overexposure to technology and information, we often see our children, mostly teenagers, always pestering their parents to buy this or that. Whether it is a newly launched gadget or an advanced game console, or a pretty dress, our children are seldom out of their ‘I Want’ mode.

As parents, we meet most of their demands; partially because we want to compensate for the time we didn’t give them, and partially due to our own desire to give our children all they want.

But beware! If we do not teach our children to curb their wants now, we are preparing them to be financial disasters as they grow up.

Teachers and parents, both, must teach the young generation to distinguish between needs and wants.

Studies show that teenagers in India are increasingly spending their money on apparels, eating out in fancy restaurants and cafes and gadgets. Brand obsession, seemingly irresistible online deals and social media-induced identity crisis continually prompt youngsters to spend more and more money. As a result, they keep buying things they hardly need and have no financial discipline.

Teachers have the power to influence their students’ minds. Hence, there is a great opportunity for the teachers to help their students learn the concept of ‘need vs want’ and motivate them to embrace financial discipline from an early age.

How to teach students to distinguish needs from wants

Here are a few fun exercises through which students will learn to introspect and understand the difference between wants and needs as well as the benefits of being financially independent:

  1. Life-Goals Vs Material Wants

Young students have a fair notion of what they want to do in their lives. Ask students to write down their key life goals on the left column of a table. Now, on the right column, ask them to list down the top things they want to buy in their lifetime. Ask them to match both and find out how their wants will help them fulfil their life goals.

  1. Wants vs Needs Game

The popular online game – Needs vs Wants (http://www.myfloridacfo.com/mymoney/games/needs-vs-wants-game.html) can be emulated in a classroom setting. The simple questions asked in the game help children distinguish between needs and wants. This seemingly simple exercise will have a long-lasting impact on the students’ minds and will help them make better financial decisions as grownups.

  1. Make a model family budget

The reason why students may not effectively distinguish between needs and wants can be their ignorance about the concept of ‘limited means’. Parents often do not discuss their financial situation with their children – to shield them against any sort of insecurity or stress. However, children who have no clue about how much their family can spend on needs and wants, tend to think that there is always enough to spend on needs as well as wants. Teachers can introduce the concept of budgeting and rational expenditure through a model family budget. Giving students a chance to better manage the budget would be a great learning opportunity for students.

  1. Teach them how to grow the money plant

Putting your students completely off their desires and wants may not be possible. Hence, it is best to teach them the concept of delayed gratification. Also, introduce them to the concept of “Time = Money with Compounded Benefits”, which means that if invested wisely and regularly, say in good mutual funds through SIPs, over a period of 10 years or more, the money can grow manifold, giving students an opportunity to buy what they ‘want’.

  1. Real Life Stories

Stories are a time-proven and fun way of imparting morals and values to children. Narrate real-life stories to students where people have gone from ‘riches to rags’ owing to their bizarre spending habits or poor money management. Each of us dream of the untold riches, and we all cringe and get affected when we hear a story of a multi-millionaire losing everything and living in poverty. We learn our lessons from real stories.

The road to financial freedom

We see money as the root cause of many evils because we choose to be a slave to money. But by curtailing our wants and inculcating the habit of regular investments, we can change this equation and be financially free. The first step to reach financial independence is distinguishing needs from wants, and our teachers can contribute significantly in this area.