Treading the saving path early on
3 min read 14 Nov 2018, 08:42 AM ISTDiscussion about savings with the children helps reinforce the notion that money earned is more valuable and satisfying, and that actually earning money isn't easy
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Dilshad Billimoria’s children, 15-year-old Sheroy and 9-year-old Danesh, have learnt about dealing with money from their financial planner mom. “I would hear my mum speak on the phone about saving and investments and it slowly started registering," said Sheroy. The Sheroy Corpus Fund came about as a result of this interest.
As parents, Dilshad and her husband Kaiwan were clear about the values they wanted to instil in the children. “We deliberately try not to give a large amount as monthly ‘pocket money’ to the kids. This helps reinforce the notion that money earned is more valuable and satisfying, and that actually earning money isn’t easy. Two, we talk in an age appropriate manner about the importance of budgeting and allocating parts of the corpus to ‘buckets’; for example, X amount for spending on toys, games, etc., some Y amount to be set aside for a rainy day, some Z amount to be invested," said Dilshad.
At home, the parents have always discussed how important it is to save for the future, the benefits of compounding and how recurring investment and starting early helps. This is reinforced by the approach to learning at the children’s school, Vidyashilp Academy, which focuses on the practical application of concepts and ideas, including financial concepts.
Read: How should you plan for your child’s future
The lessons seem to have struck a chord. Sheroy started saving and investing in mutual funds when he was 13 years old. He calls his investments the “Sheroy Corpus Fund". He saves from the income he earns from doing chores at home. “Sometimes, when there is a windfall, like a birthday gift, or prize money won, the first thing he says is, “Let’s add to the envelope we have set aside for my investment, mum," said Dilshad.
At 9, Danesh is a little too young to understand the nuances related to money, but he still has to earn his way to things he wants or show progress at school for his parents to get things for him.
Sheroy does not have a specific plan for the Sheroy Corpus Fund. He has learnt the discipline not to waste or overspend from his family. “I want the security that come from having sufficient savings to continue," he said. Just as he inculcated good habits from his family, he also learnt money lessons from their experiences. His grandparents did not buy a house early in their career and he now sees them dealing with the issues of renting a home. He sagely talks about maybe using the Sheroy Corpus Fund to buy a house early!
Dilshad uses her own experiences dealing with money matters to teach the children life skills. For instance, overlooking the fine print on a home loan meant they paid higher interest costs over a longer tenure since increasing the EMI was not a feasible option for them then. “After 7 years, I repaid the entire amount and learnt never to accept anything at face value or as the term suggested. Always reading the fine print and going into the details is what is required. This is something we have taught our children too," she said.
All said and done, the best way to learn is to do things oneself and learn from one’s own mistakes, believes Dilshad. Sheroy saw the value of his equity mutual fund investments decline and requested his mother to spread his investments around “so that I don’t have to be worried if the markets keep falling". He understood the importance of asset allocation from his response to the returns from his own investments.
“Remember to practice what you preach. 85% of the upbringing of a child is learnt from home and is learnt by observing what parents practice," said Dilshad.
Sheroy wants a flexible systematic investment plan that will allow him to invest whatever surplus he has without having to wait to accumulate the minimum ₹ 500. We hope mutual funds are listening.
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