Today’s generation is tech savvy. You ask them anything and they will just ‘Google it’. But despite the vast information available on financial management and savings on the internet, young people still tend to lack knowledge on importance of savings, investments, etc.
Teaching finances to kids can be fun but this has to come from home. As financial advisors you should take it as your duty to help your clients teach their children about money.
It will help you grow your business as it will help you deepen your bond with your clients, create a base for future clients and help you give something back to the society by teaching the future generation about money matters.
So here are few ways by which you can help your clients:
- Material for educating kids
To educate kids you need material to target the kids. Something that will keep them engrossed and has a moral story to it. You can carry out a financial literacy awareness program for the kids.
In this campaign you can show short movies, many AMCs have this material as they have carried out their own literacy program. Like, IDFC directed a movie for college kids called ‘the big idiot’. Recently Tata AMC launched multi-media investor education campaign ‘What happens when Suppandi meets Prof Simply Simple’. It’s a comic book aimed at educating the masses.
Such campaigns could help the kids understand importance of saving and investing better.
- Get the kids involved in their education planning
You can encourage clients to get their kids involved in their education planning. Today, banks offer kid’s education plans, a recurring deposit to fund your child’s education. You can encourage your client to open this account on behalf of their kids. In this account they can encourage their kids to make small contribution via saving their pocket money or get them to contribute money on their birthdays and special occasions when they receive money from elders.
- How to tackle the allowances
Generally kids get allowances every month, if your clients don’t do that encourage them to give their kids monthly allowances.
You can also encourage your clients use allowances app which helps them and their kids monitor their spending habits. Another good thing about these apps is the reward system is inbuilt. It encourages kids and the parents to give chores on which they earn rewards. This helps the client inculcate habit of saving and hard work to get what they want.
- Help kids invest on their own
Warren Buffet made his first investment at the age of 7!
You can encourage your clients to let their kids do the same. All they need to do is open a minor demat account for their kids. Kids can pick the company which they like and discuss the same with either their parents or you.
This not only teaches them about investment but also helps them understand the fundamentals of a company. It can be a yearly activity so kids don’t get bored too.
- Minor as nominees
“To make a financial plan you must have definitely gone through the insurance policies of your clients. But normally you tend to ignore the beneficiaries they have named. It is a topic you must address especially if the beneficiaries or nominees named are minors” says Terry Savage, a personal finance expert based in USA in a whitepaper authored by her.
When a parent names his kids as a nominee they think that in case of the unexpected the child will get the money, never considering the case if their child is still a minor. When the parents meet unexpected fate, the minor doesn’t get the money, in such a case you can appoint a guardian who will responsible for money management.
It is important for you to help your clients take a responsible decision on how to prepare their kids for such adversities.
Today’s youth are interested in money more than you think
Never underestimate a child’s interest in money. A KPMG survey reveals that almost 47% of full-time students like to dress well. Youth today are the biggest consumers. Most of them spend their pocket money on fashion or technology.
Many college going youth take up part time jobs to feed to fulfil their aspirations. They are waving their own path of financial independence but it also leads to some life changing financial decisions. It has to start with the family to discuss the power of money to their kids.
You can either conduct seminar with parents to explain them. Give them tips like make their teenagers use money management apps to keep a track of their expenditures. Give their kids a debit card from an early age, so they can track their spending habits and make sure they don’t go below the minimum account requirement, so they know to plan wisely before they spend.