Nurture that hidden potential

Last fortnight has been quite happening across the world -

Positives first - 👍

• Pharma companies across the globe claiming to successfully develop Covid vaccine with initial clinical trials, like for example Gilead's Remdesivir launch with Cipla in India, hopefully the trials should go well & we may see a vaccine soon. Fingers crossed. 
• The world has opened the economy again, albeit with lot of restrictions, needless to say, something is better than nothing. 
• The global liquidity has kept the markets in uptrend so far, however the question is for how long ? 
• Crude Oil is back to its normal zone & is stable since last few weeks.  

Not so good news - 👎

• Corona virus cases in India has been increasing every single day, though the patients recovery rate is significantly higher than the casualties. 
• New Corona virus wave in USA, now they are scoring at the rate of 50,000 per day. 
• China flexing its muscles by instigating their neighbors in a bid to prove to the western countries, esp USA, that they are biggest power in today's World. Xi's ambition to conquer nearby territories by financially suffocating and militarily pushing their foot in is somewhat comparable to the ambitions of Hitler who was doing the same with his neighboring states though only with its military powers.  
• India is certainly affected by Chinese aggression but not going to bow down however neither China nor India can afford a war with their depleting economies. Needless to say, India is an emerging power in Asia & the Chinese have underestimated its consequences earlier, however now they are making up for it & creating all kinds of efforts to dilute the Indian presence across the World forums. Under current leadership India seems to be in safe hands. 

Sorry, I got distracted but promise next time news will be single liners. So, this gets us to the main topic which is yet again related to the personal financial health though predominantly involving kids and teenagers. Every kid has a potential hidden within which can make him/her a financially strong & independent person, we just need to bring that out. 

Educate them as early as you can : 

Often kids while growing up takes the cues from people around and they get easily influenced by what they commonly see around just like a lamb which follows the sheep and always remains in herd and has no idea how to survive all alone. There are lot of distraction these days with internet accessible with mobiles and lot of other gadgets and the more they have internet time, the more they get drifted away with the ever so changing gaming and gizmos. Taking cues from parent to spend money on gadgets is the first thing kids learn these days whether the gadget is actually useful or not is rather a question remained unanswered. The thing is that what we need to educate children about the value of money which we ourselves have forgotten. I often tell my daughter who is just five year old, that a game which can stimulate her brain to develop new skills like memory game, constructive game, puzzles, and games involving reflexes, eye hand coordination etc etc are going to be fetch her much more benefits than the barbies & frozen girls.  Whenever we get change in coins, I often ask her to put it in her piggy bank & we will check how much she has saved on her next birthday, if you tell them it is like a game and you will win only if you get more number of coins than what she had on her last birthday, now she does not miss an opportunity to check with us if we got some change after our veg or grocery shopping.  It at least make her aware that this way money can be stored and accumulated, for her age it is sufficient learning. 

Prudently spending pocket money: 

Once your child goes to higher standards  & junior collage, you can give them a lesson on managing their pocket money & how to use it prudently. Firstly fix up an amount which the kid is going to get for an entire month, do not change this value every month. Explain the kids how much money is sufficient for their monthly expenses, even if the kid negotiate for more, give them 10% more than the agreed expenses including misc. Now you need to also tell them, that since you are giving this extra 10%, in no ways additional money will be added to this value during a month. You can also tell that what ever they are able to save that month, that money will belong to them by keeping it in home fund which is managed by parents & after 1 year all these deposit will yield 20% returns. This will help developing there saving skill & using money smartly and wisely. It is then parents responsibility to make sure than 20% tax free interest will be provided at the end of year. This way they will save their money with the prospect to buy something they desire. This is the start of their financial journey. 

Starting on their own: 

During my school days, I had a friend who created his own library by buying old comics from the Raddiwala* (I am not sure if their exist a synonym in English) and used to rent it out for the day at a rate of 50 paisa to a Rupee. He must have made atleast Rs 1000 during summer holidays just by renting comic books to a class full of children. Well, yes he had found a way to make money that early in his life. This is just an example, but the habit of asking your child to develop ideas so that they can make money will create that attitude of finding new ways of running financial life if something goes wrong in future. While teaching them compound interest do not only teach the theory, tell them the practical usage of it. They can chose any field of their liking but the most important thing is financial independence, which can save them in tough times like job losses or during such pandemics.   

Investing early:  

Lastly I am reiterating that investing right at the start of career or when they are about to leave their student life, is the best way to become rich. If you can invest a fixed percent (stressing on % because income may change year on year, but investment % should not change to lower value, increasing it on the other hand is smart thing) of your income every month in a wisely chosen product, they will be creating enormous funds for themselves when they start their own family. 

So nurture the hidden potential of your child which can make them financially educated, well versed & independent. Have a great weekend all of you. 👍

"AN INVESTMENT IN KNOWLEDGE ALWAYS PAYS THE BEST INTEREST"

                                                      ~      Benjamin Franklin