Banking Only on Good Education for Your Child’s Future?

Education Money

Benjamin Franklin famously said, “An investment in knowledge pays the best interest,” and nobody would agree more to this ideology than Indian parents. From generations, parents have been focusing on their child(ren)’s education to the extent of paranoia. Millions of families, rich and poor, spend way too much time and money on their kids’ education with a singular aim – to ensure that their children get high-paying jobs and live in abundance. For this cherished dream, Indian parents sacrifice most good things, and at times, even the necessary things in life.

Touching; but, can good education alone ensure that your child(ren) would lead a financially comfortable life. Can good education ensure they will always have enough to live a lavish life and accumulate wealth, too?

Unfortunately, earning a lot of money and having a lot of money are two different things. While you splurge on your offspring’s nourishment, both physical and academic, it is equally important to teach them financial discipline, so that they become wise enough to spend what they earn in future judiciously.

The Story of Two Friends

Karan and Sameer met 35 years ago on their first day at work. Both had passed the entrance test for the government job with flying colours. Thanks to the shared value-sets and interests, both men soon became very good friends. Over the years, they worked as a team, rejoiced in each other’s success and mourned for each other’s loss. Their houses, too, were in the same neighbourhood, which meant that their families also grew close.

Karan and Sameer both had a son each, and like their parents, both friends paid a great deal of attention on their kids’ academic orientation. Right from the time both the children started school, they were sent to a slew of tuitions, workshops and mentorship classes. Sameer and Karan, in spite of limited financial means, left no stone unturned to provide the best of educational opportunities to the kids.

The single-minded approach towards the education of their children paid-off well, and both the kids scored top ranks in their respective schools and went to the premium institutes for professional education.

At the brink of their retirement, both Sameer and Karan were happy and content with their lives. Sameer’s son, Aakash, was based in Hong Kong and headed a big investment bank. Karan’s son, Krish, was the CEO of a promising startup in the Silicon Valley, USA.

However, a rude jolt was to rock Sameer’s life. It was all over in the news and papers; Aakash was arrested by Hong Kong police in connection to a financial fraud that plundered thousands of people of their life savings. The media announced that there was concrete evidence to implicate Aakash.

Sameer was crestfallen. All the values of integrity and honesty that he had taught little Aakash were in vain. Karan consoled his friend and tried his best to save him from the ridiculing public eye.

Over weeks, the real picture surfaced. The media reported that Aakash led an extravagant lifestyle and spent incredulous sums of money on hosting lavish parties, expensive cars, luxury yachts and private jet trips. Soon, he was spending way more than his salary. Unable to make wise financial decisions and a reluctance to forgo his dazzling lifestyle, Aakash took huge debts, and in a hope to quickly repay the debt, gambled even more. Borrowing from powerful and ruthless individual money-lenders meant that filing bankruptcy or defaulting was out of the option. Siphoning money from the customer portfolios seemed to be the only way out to him.

Krish, on the other hand, had made different choices in his life. Choosing a simple lifestyle, Krish followed his father’s teachings on attaining financial discipline. He remembered how his father would tell him to ‘establish a relationship with money’, or ‘to distinguish between needs and wants’. Krish, unlike Aakash, was not baffled with the power of money or the things it could buy. He had a clear relationship with money and had specific goals on spending his fortune. Before turning 30, Krish had become a globally respected and recognized figure for generously donating money to various charities, funding startups from underdeveloped countries and contributing towards the research to find cures to deadly diseases. Krish was taught well by his father that money is just a tool. It’s not wise to treat it as divine or devious, but to use it for the benefit of your loved ones, your fellow-countrymen and the world as a whole.


Today, the dusty curtain falls on Sameer’s supposedly ‘golden years’ as he prepares himself for fighting a long, expensive legal battle and hopes to survive on the meagre pension he would get. Unfortunately, Sameer, not unlike Karan, had used a majority of his retirement fund on his son’s education.


For the parents of teenage children, there is still hope. Financial literacy is a must to make your children truly independent in their life. Instead of fuelling their cupidity for fancy things that don’t add any value to their life, motivate your children to save and invest on regular intervals. When your children make good spending decisions, invest before spending and understand financial markets, there is no stopping them from creating substantial wealth over time. The financial independence can assure that your children will lead their life the way they want without compromising on their children’s (your grandchildren’s) academic and physical nourishment; a luxury you probably didn’t have.

Investing in mutual funds is the easiest and the most transparent way of ensuring high growth over a long period. Did you know that you can start a mutual fund SIP with as low as INR 500, and earn a compounded rate of growth, beating returns from any other asset class?


Are You Making Your Teenage Child Financially Independent?


Parenting a teenage child is an anxious few years. From acne to puberty to board exams, and that constant worry about the future; taking care of many things are just as stressful for parents as they are for the teenage child.

Without fail, the most important thing in any parent’s mind during these agonizing years is the higher education of their child(ren). From academic counseling to education fairs to scouting of universities, parents put all their strength in ensuring that their child opts for the most rewarding academic stream, passes tough entrance exams and get admitted in a prestigious college.

Why not, after all, a good education is an insurance for your child’s future success!

While it is true to the extent that a good education will provide means and opportunities to take up a well-paying job for your child, it is another matter how your child handles her money in the future.

The skill to earn money cannot negate the tendency to spend impulsively, and increasingly youngsters are courting financial distress in the early years of their working life. The sudden significant rise in lifestyle expenses doesn’t help the case either. More often than not, young professionals live a flashy life and spend a lot on gadgets, accessories, apparels, clubs, and eating-out, leaving nothing for savings or investments. In such a scenario, irrespective of the monthly package, many young professionals overspend and get into the vicious cycle of debt, thanks to credit cards.

Nysa is quite familiar with such a predicament, as she suffered it firsthand. An intelligent and smart girl, Nysa was raised with love and ethical values. Her parents, both working, saw that she gets everything she needs and never shared their financial position with her. Soon after college, she got admitted into a good MBA college and subsequently got a job in a large MNC. The job took her away from home to a different city. There, her living expenses were significant, but her fat salary covered them.

The problem started when Nysa made a few friends from the office and would frequently hang out with them. This meant going to expensive clubs and restaurants, spontaneous weekend trips and tons of shopping. Soon, she reached a spot where the last penny from her salary would be spent days before the next salary credit. She used her credit card to cover up the expenses for those days. But soon enough, she was getting huge credit card bills that would take away a chunk of her salary, leaving her in a chronic cycle of debt. Her parents, too, were not able to help her as they had already invested a lot in Nysa’s education.

Even with a plush job and a good education, Nysa found it challenging to get out of the debt, at a time when her very good friend, Tanya, was not only planning her wedding but had also made the deposit on her new home.

But can this seemingly plausible future of your teenage child be reversed?

Well, yes, and that too, without much sweat.

Let’s look at what different happened in Tanya’s life. She, like Nysa, belonged to an educated, middle-class family with a similar economic background as Nysa’s parents. Her parents, too, wished that Tanya gets the best of education, and subsequently, a well-paying job (an engineer in an IT company, Tanya lived in the same city as Nysa and earned almost same as her).

But besides encouraging her to focus on studies, they also taught Tanya to be responsible with her money. Tanya’s parents often discussed their financial position with her. They also rewarded Tanya for avoiding unnecessary expenditures and best utilizing her pocket-money. Tanya learned to distinguish between her needs and wants at a very early age, which enabled her to spend on important things such as acquiring new skills, over the impulse of wasting money on clothes and shoes.

When Tanya next met with Nysa and saw her in financial distress, she took over Nysa’s hay-wire financial situation.

To begin with, she convinced Nysa to move out of the expensive flat and live with her. This saved a lot of money for Nysa. Next, Tanya apportioned a budget for Nysa’s monthly expenses and made her pledge to stay away from impulsive online shopping.

Within three months, Nysa’s finances were back on track. She thanked Tanya for helping her come out of the debt trap. Nysa also asked her secret behind living a financially independent life, to which Tanya told her what her parents had taught her when she was in school:
– Distinguish between Needs and Wants
– Invest before you spend
– Get in touch with a financial mentor (can be someone from the family)

Tanya also told Nysa about investing in mutual funds through SIPs, where anyone can start investing from as low as INR 500.00 and benefit from the compounding effect and the volatile play of the market, provided the investment period is long, say about ten years.

It turned out that Tanya’s parents started to invest some amount in mutual funds when she was just fourteen. Over the years, her parents increased the monthly SIP amount and later, after getting the job, Tanya contributed an even higher sum each month. Her portfolio had grown all these years handsomely, giving her the freedom of having a second income with which she plans to meet all her essential life expenditures.

Teaching kids to earn money is essential. But it is equally important to teach them to manage it well.

Dr. Celso is one of the leading financial mentors in Goa and a recognized author of three insightful books on managing finances. He actively participates in social welfare causes and drives financial literacy among the youth of the country.