PERSONAL FINANCE

DIPANKAR JAKHARIA

Guiding the next generation

The other day, I noticed my younger daughter getting ready for school in her civil dress instead of her uniform. It was Children’s Day that day, and she, along with other students, would be treated to sweets and goodies, accompanied by cultural programmes organised by the teachers for their entertainment. It’s a special day for the students.

 I have used this space before to address personal finance advice for young children. Topics like pocket money, budgeting, and giving money for helping with chores around the house were discussed about a decade ago. However, the world has changed significantly since then. I have spoken to many parents who tell me that their teenage sons and daughters are interested in investing in the market. Many of these parents are not well-versed in the market themselves, while a few have begun equity investments through mutual fund SIPs. The parents are often undecided on whether they should expose their teenage children to such subjects so early. To complicate matters further, even experts do not agree on a single view regarding this issue.

So here I am, offering my opinion. If a child is interested in learning how to ride a bicycle, he or she will eventually learn. If you teach them, there is a greater chance they will wear a helmet or protection and experience fewer falls. If they learn from others, they may end up with more cuts and bruises. Unfortunately, in the personal finance space, very few of us have enough knowledge to teach our children. But don’t be disheartened. You can create an environment in your home where financial topics are discussed openly as you learn. Encourage your children to learn new things about finance and share their knowledge with you. Before you begin, here are a few foundational lessons you should impart to them:

*The stock market is not a place to make quick money. It’s not about making random trades and

earning fast cash. All the stories of quick wealth are misleading, and the majority of people who attempt to make fast money end up losing it. They rarely admit their losses. If your child plans to make quick money to buy the latest iPhone, this is a red flag.

*If your child wants to invest in the stock market because others are doing it, this is a second red flag. The market is not a place for thrills or entertainment; it’s not a video game. Real money is involved, and it should never be treated like gambling. The journey is often solitary and requires patience and discipline.

*Beware if your child has received a ‘hot tip’ from someone and believes it will double their money in a week. This is a third red flag for parents. Quick wealth through insider tips is a myth. Success in the market requires years of hard work, much like training for a marathon.

*If your teenage son or daughter is influenced by YouTube or social media influencers, consider this a fourth red flag. While YouTube is a powerful medium for disseminating information, many YouTubers are excellent presenters but lack real knowledge. Stick to reputable financial institutions, both online and offline, for nurturing financial education. There is no need for a classroom setting; many valuable insights are still found in books, which social media cannot replace.

The world we have inherited was built on the knowledge and achievements of our forefathers.

Our duty is to make it a little better and pass it on to our children. In today’s world, the knowledge and wisdom you have acquired over the years are valuable assets to pass on. As the world moves at a breakneck speed, it’s hard to predict how long what we have built will remain relevant. The key for our children is adaptability, and nothing else matters more.