"Parents' financial habits influence children up to a certain age, say, 12-14 years, and beyond that it is the outside world that exerts a greater influence," says Jayant Pai, Head, Marketing, PPFAS Asset Management.
"In fact, the rebellious nature of teenagers may induce them to undertake diametrically opposite actions," he adds. However, you will still need to communicate and discuss issues that are going to have a bearing on the child's finances. Here are the main topics you need to talk about.
Education loans, scholarships & funding
Initiate a conversation about how his higher education will be funded, especially if the child wants to go abroad. Will you shoulder the entire financial burden or will it be partially handled by the child through education loans, scholarships and part-time jobs?
"Make sure you don't jeopardise your retirement goal to fund the kid's education," says Priya Sunder, Director, PeakAlpha Investment Services. Let him find out if his job will help repay a loan, whether he will need to take up a job while studying, or will he be able to earn a full or partial scholarship to fund his own education.
In Pic: Jayant Pai, Head Marketing, PPFAS Asset Management"Parents' financial habits influence children up to a certain age, say, 12-14 years. Beyond this age, it is the outside world that exerts a greater influence."
If the child is moving to another city, make sure he is familiar with all the banking operations, be it reading online bank statements, making online transactions or ATM withdrawals. He should be able to book movie tickets or online cabs.
More importantly, in order to avoid identity theft, he will need to understand security measures and terms like one-time password, two-factor authentication, CVV and difference between debit, credit and prepaid cards.
Peer pressure on spending
"The dangers of peer pressure and herd mentality while spending, or even investing in fads like bitcoin, need to be conveyed to the child,"says Pai. It's also crucial to abstain from lending to friends.
"If your friend does not repay you, you will lose both the money and the friendship," says Sunder. Split the cost, be it for eating or sharing a cab, never give your cards to friends, and don't share any passwords either.
Saving & investing
The saving habit should be started much earlier because it can go a long way in funding or supporting the child if he wants to go abroad for studies. This is also the time when he should be introduced to things like online investing avenues, online tax filing, purchase of insurance, among others. While he may not need these immediately, he will be too busy with his studies in the next few years to focus on these.
The original article could be seen here.