3 important tips on how to manage Finances from a father to his son this Father's Day - A best Heritage
3 important tips to make your children financially independent
It is said that ………
A FATHER IS ALWAYS
RIGHT BEHIND HIS SON
HE WILL ALWAYS BE
NEAR TO US
HE FOLLOW US WHERE
WE WANT TO GO
WHEN HE HOLDS THE
HAND THERE IS NOTHING TO FEAR
The primary concern of
parents is to ensure that their kids are financially independent. When your
children are on the cusp of starting their careers, it can be a good time to
help them understand how to manage finances. This will not only give them a good
financial foundation but discussing with them about money will be crucial for
their personal development. I feel discussing these 3 important financial
aspects with children can help them in making prudent investment decision in
future.
·
Set a discipline for savings and investment
Explain to
your children that it is important to invest and save money in a disciplined
manner. They can start with investing 1% of income and then gradually scale it
up to 5-10%. Most people can easily save 5-10% of their income without feeling
the pinch. Eventually, they should try to save and invest at least 25% of
income. This will ensure that, over a period of time, they will have a sizable
corpus to achieve their goals. They will also be able to make a diverse
portfolio by adding other asset classes. It'll also help them build tangible
goals for which money is required. If your children start saving early on in
their careers, long-term goals such as buying a house, planning for a family
and saving for retirement will be an absolute breeze to achieve.
·
Quantify the inflation impact
It is
very important that they understand the impact of the inflation on money. Money
loses value over time due to inflation. A thousand rupees invested at the beginning
of a year may be worth only Rs 930 at the end of the year, when adjusted for
inflation at, say, seven per cent. This is effectively a decrease in the time
value of money. It is always better to advice your children that their choice
of investments should be focused on beating inflation.
· Filter
the advice you receive
A lot of individuals believe
that financial planning is not difficult to achieve. They look at a few DIY
videos, listen to some market chatter and they believe that they have built an
expertise in picking stocks. Hence, as a parent it is very important guide them
to identify unnecessary market tips and reliable financial advice. Most
importantly, get them in touch with a financial advisor who will help them
understand the fundamentals of wealth creation. Always remember, teaching your
children about money at any stage is going to take time on your part. But if
you want your children to know how to successfully manage their money when they
get older, take time out on this 'Father's Day' -- I are sure it will be worth
it!
This the facts of the life and you had very well explained the facts.
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