Help your child open a bank account. (Photo: iStock)
Help your child open a bank account. (Photo: iStock)

Be a financial role model for children

  • Fixing small goals and achieving those makes a child ready for planning the bigger financial goals later in life
  • Take him to the bank along with you and let him see you depositing and withdrawing money, apart from other banking transactions

I want to inculcate good financial discipline in my son who is 14 years old. What are some ways to get him interested in savings and investing? He has a pocket money of 2,000 and also earns 1,500 for voluntary work. Please advise.

—Rajan Mehta

It is good to cultivate the habit of savings in children and the earlier it is done, the better it is because it will stays with the child forever.

If you are trying to create financial discipline in your child, you need to make her interested. Start by asking him how he would he want to spend the money? What is the asset he wants to buy? And make him save towards that. In case it is an expensive purchase, you can always say that you will be contributing partially towards it. You can also offer to match the amount of his savings.

Fixing small goals and achieving those makes a child ready for planning the bigger financial goals later in life. Help your child open a bank account. Take him to the bank along with you and let him see you depositing and withdrawing money, apart from other banking transactions. Start telling him about the interest rate earned on a savings account and how a small amount can increase over a period of time.

In case he is not able to save in a particular month, explain him about the importance of budgeting and how, to compensate for the lost saving of that month, he should constrain himself for the next few months.

Most importantly, remember that a child learns from his parents and tries to copy them. You need to be a role model for him and save along with him.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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