As a loving and wise parent, you wish for your children to understand to grasp important financial concepts early on. Yes, you can start them off on the path of investment-focused financial literacy during childhood. Introduce some valuable investing lessons for your children’s financial future by taking cues from this guide.
1. The importance of starting early
Perhaps the most important lesson to impart is getting started early on. Allow your child a small sum of pocket money every month for six months. Tell them that they can use this money however they want, subtly throwing in the idea of investing. Your child can start investing from the first month itself or wait any other month they want.
Throughout the course of these six months, monitor their financial choices. Based on these choices, teach them relevant outcomes. If your child has spent all the money, tell them what they have missed by doing so. If they invest the money after a couple of months, let them see how their money has compounded but compare the outcome to that of investing all the money. This will teach them the benefits of investing sooner than later.
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2. The importance of discipline
Give your child a small amount and ask them to invest. Now introduce a plot twist by saying that they can withdraw the money in the next 5, 10, or 15 days. To make it more enticing, offer to buy them a gift after they withdraw the money.
If your child makes it to only 5 days, buy them a small gift but tell them what was awaiting them had they waited till day 10 or 15. If they do manage to stretch till 15, your child has understood the basics of the ‘Bank of Treats’ game well. However, you should still let them know the gifts for days 5 and 10. Such comparisons are helpful investing lessons for youngsters, which helps them understand the importance of staying disciplined and patient.
To teach them the importance of discipline early on, you can also consider starting a mutual fundfor them.
3. You can start small
Another important lesson to teach your children is that no amount is small. It is naturally not possible for kids to invest large sums. Teach your kids the value of starting small through Systematic Investment Plans (SIP), which allow investors to start with as little as Rs. 500 a month! Through the power of compounding, the sum will increase leaps and bounds over the years and your kids will thank you for it.
Additional Read – SIP story: Why did Rohan choose to invest in an SIP?
Now that we’ve talked about lessons for your children, how can you make their investing journey easy? Download Tata Capital’s Moneyfy app and manage your child’s portfolio online. Compare between funds, see the recommended picks of the day, and choose mutual funds based on your investment goals, time horizon, risk profile, and other requirements. Streamline your investment journey with Moneyfy today!