Kids do what parents do and not what they say. The best financial education for kids is to see the parents planning and executing a financial plan. But sometimes it doesn’t work like that and special education is needed.

Subramanian Iyer doesn’t want his children to miss out on understanding money—something that he regrets learning too late. It didn’t help that as the first-born, he was shielded from serious issues. “Though I was the eldest of three children, I was always pampered. In fact, I am still treated like a kid," says Iyer, now 45.

Iyer wants to inculcate the value of money and the importance of managing finances in his two sons—Varun, 17, and Pranav, 12. “My elder son is well within that age when he needs to know these things," he says. The earlier, the better for the younger one.

Photo: Ashesh Shah/Mint

Curiously, he remembers his parents as financially organized. “They didn’t have a financial plan as such, but used to follow the time-tested tenets of saving," says Iyer.

But the marketing professional doesn’t seem to have taken a leaf from this in his early life. “I was highly disorganized about my finances. Though I did save occasionally, there was no logic or pattern to it. Whatever I saved, I thought, was so little that I blew it up from time to time," he says.

With children growing up, family responsibilities increased. Though his wife is an information technology (IT) professional, she devotes a lot of time to the kids and doesn’t really have the time to worry about the finances.

So, good sense prevailed and Iyer went for a plan three years back. “I realized that I hadn’t saved enough to secure the future of my family. With prices of even the essentials hitting the roof, I had to sit up and get into action at some point in time," he says.


Irregular savings, lack of goals: The biggest problem was that there was no pattern that Iyer followed in his savings. “My savings were erratic. Moreover, there was lack of clarity on what instruments to invest into," says Iyer.

He had invested in a few stocks and mutual funds, but due to lack of clarity he couldn’t sustain the investments and withdrew for small needs whenever needed. “I would call them ad hoc investments, which were made without any particular goal or purpose in mind," says Iyer.

Unreasonable: Like a lot of other investors, he had no idea whether the returns from an instrument he was investing in would be able to meet his financial requirements. “For example, I invested in, say, a house without thinking how the returns from that would actually help me reach any of my goals," says Iyer.

Equity-oriented: Though he had some money in fixed deposits and post office schemes, most of his savings were in equity instruments, such as stocks and mutual funds.


Systematic savings: Iyer started investing systematically in mutual funds through systematic investment plans as advised by his Mumbai-based financial planner, Suresh Sadagopan. He has now no exposure to direct equity through stocks as was the case earlier.

Goals: “Providing for my family without affecting the current lifestyle is my primary aim," says Iyer.

Other issues, such as saving enough for his children’s education, automatically falls into his radar. “My son is in class XII now and soon I would be needing money for his studies," he says. He also wants to buy property for his children, but has not started saving for their marriage yet. “That can still wait as they are still young. The immediate need is their education," says Iyer.

Though he had broad goals earlier, he had no financial road map to achieve them. “The plan demystified the concept of goals and now they seem more achievable somehow," he says.

Diversification: The planner made him invest in mutual funds and even unit-linked insurance plans (Ulips) to maintain the equity part of the portfolio. But he ensured that a larger portion of his savings were in debt instruments to lend stability to the portfolio.

Insurance: Fortunately for Iyer, he was not short on insurance when he met the planner. “That’s something basic and I had that in place," he says. However, the planner did top up his cover by making him buy a term plan. He had only Ulips and endowment insurance policies.

Having a plan has assured Iyer that even huge goals are achievable through systematic savings. “Earlier, I was a spendthrift. The plan has curbed that and made me think about my consumption pattern," he says.

Ask him what his money life looks like now and he says with confidence, “More controllable." And he wants his kids to be in control, too.

Best Advice

Getting into a system rather than make ad hoc investments