How to make your kids penny-wise

NEW DELHI: Planning parenthood is a serious business. Apart from mental and emotional preparedness, it also requires a sound investment strategy to safeguard the future of your children without adding financial strain on you. However, teaching financial lessons to the wards is one of the most important responsibilities of a parent.

Invest early for children
It is important to start investing early. You can start with an SIP or small recurring deposit so that you have enough backing to take care of school admission fees and other expenses. Apart from this, there are many policies that ensure good returns on fixed intervals. Moreover, the government has allowed parents to invest in the name of their children in instruments such as PPF, NSC and other small saving schemes. Even small amounts can go a long way to make a huge corpus when your children grow up.

Make them financially smart
Financial literacy is a must. The earlier one starts, the easier the evolution of a financially smart individual. So, it seems a good option to give your children a basic understanding of finances. You can start by allocating your children a pocket money either on weekly or monthly basis. Allow them to use these funds for their hobbies or to purchase something they like. This is a proper way to teach your children a complete cycle of money management. It is important, however, to keep a tab on where they spend. It will also help you understand their spending habits.

Engage them in purchases
It is important to take them along when you go shopping, to pick groceries or while making budget for the monthly grocery list. This will not only make them grounded, but also help understand that saving is as important as earning.  They learn to compare, bargain and look for better deals. Engaging teenage children in paying bills, such as power and water bills, will make them more responsible. Make them plan the budget for small birthday parties. It will enhance their organisational skills and teach them how to hold an event within a stipulated budget.Taking your children along for banking transactions like depositing small cheques will teach them about basic financial transactions, which they have to deal with in their future life.

Warn them of fraud
Always discuss with them about the dangers of sharing passwords, PAN number details, banking passwords and basic information such mother’s name and date of birth with strangers. Teach them about phishing and ponzi schemes so that they are alert. With the millenials hooked online, it is important to teach them how much personal information can be shared online. This will make them financially smart, and also safeguard them against any possible frauds.

SECURE YOUR CHILD’S FUTURE
If your child is small and you have no long lock-in period, PPF is a good option. It is safe and gives tax benefits too. For girl child, Sukanya Samriddhi Account is an excellent plan. This scheme offers an interest rate of 8.4 per cent and is tax-free Some debt mutual funds offer better returns than bank deposits and are more tax-efficient than bank deposits