When mothers discuss finance with adolescent daughters!
Amrita Choudhary (name changed), a top-brass management professional in an MNC was one of the many people across the country who had to face the axe due to the economic disruption unleashed by the COVID-19 pandemic. A single mother of a teenage daughter, Choudhary had a harrowing time until she was employed again. Having exercised financial prudence for years, she had an adequate buffer that helped her sustain a few months without an income. However, the turn of events also led to the realization that as parent it was extremely important for her to start building her 15-year-old daughter’s money management skills – something which she had procrastinated for years.
“Adolescents today are living in a world that is highly driven by consumerism. So it is even more important for this generation to understand how money works and it is upto the parents to make money relatable. When I lost my job, my daughter realised that she would have to give up her indulgences for some time. She didn’t fret about it and took things in her stride in a very mature way even though it must have been tough for her to avoid measuring herself against her peers,” Choudhary narrates.
Participation and trust
Money lessons are equally important for all adolescent children notwithstanding their gender. But it is important to keep in mind that eventually gender indeed weighs in on the equation that young people forge with money as they become adults. Choudhary says, “It is heartening to see today that more and more families are discarding discriminatory tropes while bringing up children. But there is no guarantee that children can continue to inhabit the same bubble when they grow up. For instance, the gender pay gap is a real problem and many young women still have to fight against patriarchal mindsets to remain independent and not cave in to the demands of traditional gender roles. So, it is important for parents of adolescent girls to tweak the lessons keeping in mind the struggles that plague most adult women.”
Parvati Iyer, chief investment officer at Femwealth.com an online investment management platform opines adolescence is an appropriate time to introduce financial literacy concepts such as value of money, saving, spending and investing. “A good start is to discuss money matters in the house as a part of normal conversation. This can create awareness and help instill a sense of financial discipline in our daughters. Ask your daughter to set goals for her money and help her save for it. Initially this goal could be something simple such as an expensive shoe that she wants for her next birthday. Over time she could even participate with you in longer term goals such as her college education,” she says.
Given that children emulate their parents, making them participate in money matters of the household and not just confining them to managing money for their wants can go a long way in making them financially savvy. Anuja Agarwal, managing director at InvestAscent Wealth Advisors Pvt Ltd, says, “Daughters look up to their mothers when it comes to managing household chores, careers and finances. Starting from budgeting to savings, mothers can play a key role in shaping the attitudes of of children about money management. Mothers can involve their adolescent daughters in budgeting household expenses so that they can start prioritizing between needs and wants and spend accordingly.”
Agarwal also emphasizes that making teenagers taste financial independence can go beyond giving them pocket money or allowances. “Pushing kids in the early years of adolescence to start earning is advisable. Create awareness in them to start earning by way of tuitions for the younger kids, baking a cake, babysitting or even doing some house chores. This will make them understand the importance of money. For young girls, it can help them lay the foundation of a perspective on the importance of financial independence and gradually that can help them gain confidence to not completely rely on the male members of the family for financial management as they grow up.”
Making investments a part of the syllabus
Agarwal believes parents should always touch upon the concept of investing and not put a full stop after they have been taught the basics of saving and budgeting. “The habit of saving and investing in the right instruments like mutual funds, fixed deposits etc has to be inculcated since adolescence. They can invest their small earnings or even the money they receive as gifts from parents, grandparents and relatives. This will also familiarize them with the banking system (as they will have to open their bank account) and the skill of managing and monitoring their own funds. Mothers can assign an achievable goal for their daughters which will keep them motivated to invest whatever they save.”
Iyer explains that simple investment vehicles should not be out of reach if parents are vigilant. “A good step towards investing is to introduce her to mutual funds. Open a mutual fund account in her name and have her invest part of her monthly allowance. This could be in the form of a SIP and you could track the performance of the fund regularly with her. This will enable her to understand how wealth grows, the relationship between risk and return and also introduce her to financial jargons. Growing up is all about making many tough decisions and financial decisions are an integral part to it. It is necessary that our daughters manage their own money and gain confidence in their ability invest wisely.”
• As parents, you can also introduce them to the concept of loans. Next time they need something which was not budgeted, you can lend them some money with interest and ask them to repay in a stipulated time.
• Make sure to practice what you preach. If you are a believer in saving up to buy something, it’s more likely that your teenage daughters will follow suit but if you give in to your temptations too frequently, they are likely to develop that same nonchalance towards money.
• Be honest with them – talking about the mistakes that you made can help you establish that connect that is required for teaching them about money management.
This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.