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Financially well off and got teenagers? It’s not enough to teach them only about saving

While the previous generation was taught that saving is a must, the next generation who inherits the wealth that has now been created also needs a lesson in money management. Here are two things you can focus on when it comes to passing some money wisdom to the next generation.

Today’s urban teenagers are given financial security on a platter. Let’s not get surprised that it gets taken for granted. Families are smaller in size and incomes are larger, making the next generation very comfortable when it comes to having a financial cushion. 

Moreover, the last three decades have seen Indian middle-class rise in terms of earnings and wealth thanks to innovative ventures and acceptance of equity as compensation rather than relying simply on a salary. This shift towards wealth creation is also a shift in the way the next generation inherits this wealth and the understanding of money. 

While the previous generation was taught that saving is a must, the next generation who inherits the wealth that has now been created also needs a lesson in money management. Here are two things you can focus on when it comes to passing some money wisdom to the next generation. 

1. Teach them the importance of growing wealth

Money is not just to be saved but also invested. It’s no longer enough to help your children open bank account or just put money in their piggy bank. They know that whatever you don’t put in the piggy bank they can ask for. You must try to move a step ahead and talk to them about meaningfully using the money that’s at their disposal. This means investing. 

The younger they are when they begin investing for growth, the more they can take advantage of Time for long term compounding of returns. This is possible through growth assets like equity, rather than investing too early in fixed return securities. 

This is also possible if they invest in their own innovative venture when the time comes. Such moves can help them learn about risk and return on the job itself. Focus more on the utility of money rather than just saving. This kind of focus will also help shift focus away from overspending which can deplete wealth faster than you think.

Understanding the importance of savings is paramount but when one entire generation hasn’t experienced scarcity or frugal living the way their previous generation has, then drilling in this concept is not easy. Moreover, we try to teach savings while providing the child with all material comforts; there is an experiential disconnect.

2. The freedom of choice that comes with financial security 

Having enough to live a comfortable life opens up choices when it comes to what you can do with your time. When your children understand their inheritance and the financial security provided by you, they should also understand that this gives them the ability to really select what they want to do with their time. In this awareness lies the utility of an individual’s own time.

This ability to select should help them make conscious and meaningful choices about what’s next in life. Choosing careers and professions which they can be passionate about right from the beginning rather than chasing high salaries. These choices can potentially change future outcomes for young minds.

Understanding the importance of savings is paramount but when one entire generation hasn’t experienced scarcity or frugal living the way their previous generation has, then drilling in this concept is not easy. Moreover, we try to teach savings while providing the child with all material comforts; there is an experiential disconnect.

Instead focus more on how they can put their money to work, make it sweat and grow. You are handing them the comforts money can buy, now teach them use it for the most efficient outcomes.   

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