Why Teaching kids about money management?
By Mr. Ashish Vohra, Max Life
Insurance
Parents need to teach their children the importance of money
management from a young age. It is also important to teach ‘age-appropriate’
money management lessons.
An Assocham study, “Trends of Pocket Money in Urban Areas”,
revealed that school and college going teenagers in metropolitan cities are
getting between Rs. 3,600 to Rs. 12,000 per month as pocket money.
Research shows that this is primarily being spent on visits to
malls and multiplexes, mobile recharges, electronic devices and other
e-commerce activities.
In comparison, a decade ago, teenagers who received Rs. 450 to Rs.
500 as pocket money per month considered themselves “rich”.
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| Ashish Vohra, Max Life Insurance. |
This change highlights the need to teach the next generation the
essentials about money.
Here are few tips that will make the task fun and effective.
* Encourage children to use cash for small ticket purchases..!
While credit and debit
cards are more convenient, using plastic doesn't allow children to see the
actual exchange of money for purchases.
We should encourage children above a certain age to use cash when
making small ticket purchases like buying coffee, snacks, movie tickets, etc.
This will allow them to understand a physical transaction
involving the exchange of cash for goods or services.
It drives home the point that to buy things you have to hand over
your hard-earned cash.
* Explain the source of cash through an ATM..!
Given the increased use of plastic for all transactions, children
often view money as an unlimited and inexhaustible resource.
We need to explain to children how it is important to work hard
for money.
For a young child of 3-4 years, the ATM is actually a great place
to start, where you can tell your child that money does not really come from a
machine, but when you use the machine to withdraw funds, you have less money in
your bank account.
* Leverage lessons from the supermarket..!
For slightly older children who accompany you to a supermarket,
ask them to help you in picking out household supplies.
You could tell them to take a pick from an aisle and explain the
difference between a lower and a higher priced product in the same category.
The affordability factor is important in this context and the
supermarket is a great place to establish this.
*Inculcate money values by setting money goals..!
A young child of 4-6
years of age can be taught the difference between needs, wants and wishes.
Usually, this is when, children start receiving monetary gifts from friends and
relatives. It is a good idea to help them understand what they can do with the
money they get. Teach them to spend judiciously on needs versus different wants.
Instead of gratifying each demand, you could take the opportunity
to teach them the importance of savings. Encourage them spend from their money
and set a limit or a budget for their expenses. A teenage child can be
introduced to the concept of making small savings every month towards a
particular long-term goal.
* Cultivate financial independence..!
For long-term wishes
children need to be taught the virtue of patience. Instead of depending on you
to fulfill every wish, teach them that long-term savings will help them fund
their own wishes. For children under the age of 10, it may even be a good idea
to open a bank account that comes with a debit card designed for children in
particular. Children should be taught to look at their bank account and see how
it increases with the addition of interest.
The writer is a senior director & chief distribution officer,
Max Life Insurance
Mr. Ashish VohraSenior Director and Chief Distribution Officer
Mr. Ashish a Mechanical Engineer from IIT - BHU, and post graduation in Management from IIM – Bangalore is Senior Director And Chief Distribution Officer at Max Life Insurance. As the Chief Distribution Officer he is instrumental in maintaining the company's distribution footprints across the nation and acquiring key partnership and bank distribution alliances. He has a well rounded experience of over 21 years spanning marketing, sales, product and business roles in the financial services and manufacturing industry.
Ashish spent 10 years with Eicher Motors and was responsible for Network expansion, Channel and Dealer development, Sales of vehicles and Service. He then moved onto Citibank N.A. for 5 years in various roles such as Regional Manager (South), Sales Head for the Asset Based Finance Business, Product Head for Channel Finance for Citibank and finally as Vice President and Business Manager - Asset Based Finance before moving on to his next assignment in 2005.
Ashish's last assignment was at Fullerton India Credit Corporation Ltd as Business Manager, Commercial Mass Market. As a Founder team member at Fullerton, Ashish was heading the P & L responsibility for Commercial Mass Markets and helped Fullerton to successfully capture the retail finance opportunity in India by building a network of 500 branches, 8000 employees, 2,25,000 customers and Rs. 1,600 Cr of portfolio in a short span of 3 years.
Ashish is known for his ability to seamlessly partner and build shared goals with team members. He is a firm believer in the fact that deliveries happen through people.
For Media Contact
Max Life Insurance Co. Ltd.
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Gurgaon - 122002
Phone : (0124) 2561717
Email : corporate.communications@maxlifeinsurance.com
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