Make your money legacy live on

Most of the people I come across,rarely present their kids with the legacy of money. They often believe that money rarely has a legacy,and one cannot teach or pass down “money lessons” to their children. While you may feel that they will be capable of handling their financial situation when they grow up,a few lessons from the past goes a long way.

Sometime back,a client (let’s call him Mr A) came asking for advice as to how he should make his teenage son more self-sufficient with his money. He told me that no matter what he told him,he would not respect the money and would end up spending most of his resources. He said he didn’t want him to suffer later on in his life and wanted him to be self-reliant and understand the legacy that they had with money.

Over the years,it’s not just a few people who go through this phase. Majority of people always have trouble making their children understand money itself. Always start by explaining and defining to them the difference between a want and a need. Differentiating between the two will help them realise where they should spend their resources and how much of it should be spent.

One of the best ways of doing this is giving kids a fixed amount as pocket money and ensuring that they have to use this to fulfill wants. Teach them the basic principles of money,in ways that suit their age and needs. This process can make them understand the value of money and imbibe the responsibility of handling money.

Another important aspect of creating a financial legacy is sensitising kids to the need of charity and helping those around us. (This is a lesson several adults need to learn as well!) Considering the fact that we live in hard times – times when financial meltdowns,natural disasters,and several other factors have resulted in people living through a sense of hopelessness. While we work,and teach kids,to focus on our personal goals it won’t hurt if we also focus on one external goal as well.

There are several ways and means to help others. It could be funding a small part of a micro-finance loan,or setting aside some money to sponsor a kid’s education. Parting with a few hundred rupees will not make a huge difference to your kid today,but the lesson that you teach him,will stay with him for life.

If you do involve your kids in the financial planning process,it helps them understand a great deal about their future and how that money can help them. Mr A brought his son to a financial planning process with his financial planner. The planner asked him about his dreams and goals and asked him how he would to go about it in life,if he never understood the legacy of money itself.

As part of the exercise of teaching his son about planning his finances,Mr A asked his financial planner to sit with his son and create a financial plan for him as well. The kid was

initially confused when the planner started asking him questions about his dreams,aspirations and how much money he would get from his parents that year. But the process made him start thinking and questioning.

He started to comprehend the basic economic problem felt by every adult – ‘unlimited needs and limited means.’

Imparting with money is what most parents can do. But passing on the legacy of money is what is needed to be done. (And yes,the kid did have a financial goal – buying an iPad for himself on his next birthday by saving his pocket money and earning some more from doing odd jobs around his house.)

—Author is Founder & CEO,Freedom Financial Planners