5 Financial Tips You Must Give Your Teenage Child

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Mahesh earned quite well. A top management executive at a leading IT Indian MNC, his package was, as a few of his college friends called, ‘ridiculously high’. Well, Mahesh deserved every penny that credited in his account each month. A high-flying executive, literally, Mahesh was continually scaling the globe; from Europe to North America to Asia. He was instrumental in cracking big-ticket deals for his company and setting up new offices around the world.

A man of few words with stringent self-conduct codes, Mahesh rarely missed his exercise regimes, and inspired by several iconic leaders, lived a frugal existence. However, his only splurge was his son, Vivaan. To compensate for the lack of time he had for his son, Mahesh saw to it that his son gets whatever he wants, “after all, you get young only once,” he would say with a smile.

At 17 years, Vivaan had more worldly possessions and monthly allowance than all his friends combined. From the latest PlayStation to high-end smartphones to frequent splurges on movies and parties, Vivaan had everything that any of his collegemates could ever imagine. Yet, his demands were increasing by the day. Realising the fact that money is not a rare commodity for his dad, Vivaan lost all respect for it. He was continually surrounded by opportunists who would praise him for his looks and skills just to be treated in swanky restaurants for free.

Suhana, Vivaan’s mother, was not at all happy with his uncontrolled spending habits. She had seen one of her cousins ruining his life as a result of squandering all his inheritance in a short span of time. To add to her worry, Mahesh would always brush her protests aside saying that there is nothing terrible about showering his lovely child with nice gifts and money.

But she knew that Mahesh was spoiling Vivaan silly, and if he gets into the habit of overspending, he will live all his life in financial distress, no matter how well he earned!

On a chance meeting with an old acquaintance in the shopping mall, Suhana learnt about a well-respected financial mentor who devoted his life to spreading financial literacy among the youth of the city. As she heard about the financial mentor’s work and the resulting impact of his work on the society, she became resolute to take his help.

During long Christmas vacations, Mahesh was finally at home for more than a few days. Vivaan, too, had his college holidays. Suhana chose this time to invite the experienced financial mentor to her place over high-tea.

As it turned out, Mahesh was acquainted with the financial mentor and held him in high regards, too. Much to Suhana’s relief, the stage was set for an open, casual and amicable discussion among the three men.

Vivaan was much impressed with the financial mentor’s thought process and how, besides earning himself an ever-increasing pool of money, is now creating positive social impact. Mahesh, too, for once, was listening to someone who bluntly pointed out that he is doling out way too much money on his son than necessary.

After a discussion that started at high-tea and went on till supper, the financial mentor gave the following five tips to Vivaan, and asked him to get these framed and nailed on his bedroom wall:

  1. The flow of money is not perennial. It never has, it never would.
  2. Establish your relationship with money. The ideal one would be, ‘the means to meet ends’.
  3. Distinguish between Needs & Wants. Don’t splurge money on things you can live without.
  4. Invest before you spend. This will help you in spending only on your needs and will help curb impulsive buying.
  5. Plant your money-plant, today. Small, yet regular investments have the power to build a significant, ever-growing, portfolio over a long period, say ten years.

These simple, yet powerful tips made an impact not only on Vivaan, but also his father, Mahesh, who decided that instead of buying expensive gadgets for his son every now and then, he would start investing a decent sum in mutual funds through SIPs (Systematic Investment Plans). Vivaan also promised his father and the financial mentor that he would immediately curb his extravagance, and on taking up a job, will keep contributing to the SIPs his father is planning to start.

That evening was one of the happiest for Suhana. She smiled looking at Vivaan and Mahesh’s faces when the financial mentor told them how much Vivaan’s portfolio would have grown by now had he started investing a fraction of his monthly allowance a few years ago.

The next morning brought a lot of positive changes at Suhana’s house. Vivaan and Mahesh made a trip to the financial mentor’s office and requested him to help them start SIPs in a good mutual fund for Vivaan. Suhana was doubly excited as not only Vivaan, Mahesh, too, showed sincerity towards embracing financial discipline. He proved this by having a stock of all his unnecessary club memberships, reviewing investments in traditional investments (which, to his surprise, were earning him negative returns post inflation) and fixing other financial leakages.

Since that fateful evening a few years ago, Mahesh and Vivaan have come a long way, as far as financial discipline goes. Mahesh’s ‘ridiculously high’ package seems even greater with lesser pilferage and drawings for his son. He has also found his relationship with money; he contributes generously towards a program that provides IT-enabled teaching to lesser privileged children. Vivaan, on the other hand, is now an ambassador of financial literacy and helps his financial mentor in spreading it among his friends and peers. No more reckless with money, Vivaan sold most of his fancy possessions and invested the money in his mutual fund as a top-up. No wonder, he is heading for a bright future with the rare gift of financial independence on his side.

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