Key Steps for Parents to Teach Teens Money Management Skills
Financial matters are discussed in very few Indian households. Indian parents will go to any length to pro- vide the best education and material comforts to their children. But they also leave the kids to fend for themselves when it comes to understanding money matters and managing their finances.
Interestingly, most people believe parents should teach financial management to children. But a survey shows that very few families involve children in financial decisions. That’s not a good sign. Experts say if you want to teach somebody, involve the person in that activity. Your teenager will be able to make smart money decisions later in life if they learn to participate in such decisions for the household.
Parents need to remember that if they don’t teach their children how to manage their money, someone else will. Give your child exposure to financial products and services as soon as they can do so if you want to give them a head start in the real world. Once a person reaches the age of 18, they are considered an adult. Here are some important initial steps a parent ought to make at that time.
1.Apply for a PAN card:
Once your child reaches the age of 18, you should start with this. Almost all financial products and services, including opening a bank account and investing in bonds, securities, and mutual funds, require a PAN card. Some of them are possible without a PAN card, although with limitations. In case the annual income is over 2.5 lakh then a person will have to submit their tax return. Even if there is no tax liability due to the refund under Sec. 87A, this must be done.
2.Open a savings bank account:
The PAN card takes roughly 15-20 working days to arrive, however, the applicant receives a soft copy by mail in less than 48 hours. This electronic version can be used to start a savings account, which is undoubtedly the most crucial phase of the young person’s financial development. Select a bank with a wide range of services and a network of branches and ATMs. Most significantly, it ought to be a financially stable bank. So choose a bank that has made technology investments, has a user-friendly interface, and a fantastic mobile banking app that would excite a youngster.
3.Get them familiar with UPI and plastic money:
In recent years, the debit card that is included with a savings bank account has lost some of its utility. The UPI’s introduction has altered how Indians do financial transaction . Teach your youngster how to use a debit card and the dangers of online fraud that go along with it. Setting a modest daily transaction cap on the debit card is a smart move so that any abuse can be caught in time. Let your child register for UPI and connect it to his bank account. Allowing him /her to utilize a wallet for UPI transactions will keep you from getting into any trouble.
4. Educating them on the significance of cash flow and budgeting:
By teaching kids the fundamentals of budgeting, spending, and saving, we can help them develop sound financial practices. It is critical to enhance budgeting skills in them so they can use their money on the things they truly need rather than splurge on unnecessary items. To know where their money goes, your kid needs to understand cash flow and how to keep track of their spending.
5. Guide your teenage child to invest in Mutual Funds:
We are all aware of the advantages of starting investments early in life. A person who starts at age 25 can build a significant sum by the time he reaches 60. Imagine what one could accumulate if they began seven years earlier, at age 18. One may not have much money right now, as they are not working However, saving small amounts each month or investing gifts received into equities funds can be quite profitable in the long run. Allow them to invest in fixed income category through mutualfund debt funds for short-term goals, and they can watch their money increase regularly and safely too .
Conclusion:
It’s not always a bad thing for parents to want to ease their children’s lives by giving them money or by covering major life expenses like education. However, it’s also a fantastic idea to offer your teen the financial literacy they need to make wise financial decisions
After all, the world is full of difficult decisions on managing money and priorities once they start earning their income. Today, when the risks are low and there is a greater opportunity to learn from mistakes, you can prepare your children for future financial secure & more aware about nitty gritty of personal finance by imparting them little but valuable personal finance lessons.
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