Best financial tips a father can share with his kids
According to research, lessons learned early in life help shape people’s financial behavior. While foundational institutions such as schools and colleges often provide a level of awareness towards financial education, it is the responsibility of parents to sow the seeds of financial literacy and practices. Getting started on retirement planning early, along with understanding the difference between saving and investing, can be of great help.
While parents can teach their kids the importance of good financial planning and explain the basics in a valuable way, it doesn’t hurt to have some fun from time to time! According to the Financial Industry Regulatory Authority Foundation, only one-third of Indians can pass the financial literacy test compared to two-thirds of Americans.
This Father’s Day why not spend quality time with your kids and take a fun financial quiz? Here are 5 questions you can ask your kids with some tips and tricks:
When is the best time to start your financial planning?
Expert Tip: Planning early is the first step towards financial and social security. People ignore the importance of early financial planning and consider it their years away, and this is a critical mistake. It is recommended that you start as soon as you join your first job. For the best insights, continuously read about financial planning and portfolio management that will help you avoid any traps. You can start with basics like online fixed deposit or life insurance plan with minimum/standard premium.
How should a budget be financed?
Expert Tip: The best way to budget your finances is to calculate net income and break it down into needs, wants and savings. This is a popular rule that will help you balance your expenses and put your money in the right basket. It is important to set savings goals that are realistic. Investing a fixed amount every month in the right plan will help you get a clear return on investment. Not only making the budget but also reviewing the budget on time is an important step.
What should be the first financial tool to invest in?
Expert Tip: Choose policies, schemes that are easy to invest in while ensuring overall financial security. In that sense, products like life insurance term plans are a prudent investment option. Term plans are the purest form of life insurance that provides comprehensive financial protection against the uncertainties of life, as well as protection for future goals. It is one of the most affordable insurance policies, which ensures high coverage at low premiums.
What should be one’s investment strategy?
Expert Tip: To achieve the long-term value of an investment portfolio, it is recommended to diversify investments rather than putting all your fruits in one basket. According to a recent survey, 43 percent of urban India invests in term plans, 39 percent in savings and 19 percent in market-linked schemes. It is always advisable to maintain a balance of investments like life insurance, FDs, bonds, shares, mutual funds etc.
(V Vishwanand, Deputy MD, Max Life Insurance)