Financial communication: keep it clear….
Let us consider the following cases:
You are a small businessman with 2 daughters. Your younger daughter has come to you saying ‘I want to marry this boy and he is doing business’.
What will you ask her / him? Do you know what to ask that boy financially speaking? If he has a job you can ask him for his Form 16, or estimate on the basis of his qualification.
What happens if he is self employed? Then what will you ask him?
How will you even know whether he is financially responsible?
You are a vendor of stationery to many corporates, you know many people in these places, and your son comes up with a proposal to do an MBA from a big college and he (and your wife) tell you why you should pay the Rs. 900,000 fees.
Over the last 2 years your business has not been doing too well and you have earned only Rs. 500,000 pre tax and you are wondering how will the next year be….
What will you tell him?
Take another case – You have a house worth Rs. 55,00,000 PF of Rs. 900,000, PPF Rs.400,000 and bank fixed deposit worth Rs. 12,00,000. PERIOD. That is your ONLY net worth.
Your son wants to make a career as a football coach…and you have no clue how much he will earn – and he continues to live with you
What will you tell him?
Your daughter is 34 years of age, her husband is 36 and they have – a) no job b) no net worth, c) no house (he just lost it and your daughter had given up the job to look after her kids).
Financial planning is not for the Rich and Famous. In fact they can get along fine without any planning perhaps. It is the people with very tight resources who need to have very good financial communication skills.
Your kids need to know that basic education, food and clothing till they are 21 is theirs by right. (You brought them into the world, so you will do it, simple)….but beyond that THEY HAVE TO STAND on their own feet.
Home loans, educational loans, etc. are available.
A son in law aged 36 is NOT YOUR RESPONSIBILITY – he better be left out of your house, NOW. Or your other children will get a very poor message. Ask them to make their own arrangements for food and shelter. Offer to pay for medical and term insurance premium (could be a disaster if something were to happen), and school fees for the kids. Beyond that they are on their own.
Sounds cruel? welcome to subramoney.com. That is the way it is.
bharat shah
only today morning i astonished to hear from my wife that son of our acquaintance in last year of engineering is advised not to part in campus interview for future job, as if he would be selected , he would be in love of money making , and would not try for further studies abroad.
Khushnood Viccaji
I completely agree with Subra’s opinion about kids being parents’ responsibility upto 21 years (I would probably stretch it to 25 years MAX !)
After that, if the kid “wants to follow his / her dream”, they can do so provided they have a *clear* idea about how to EXECUTE the dream, and how THEY are going to fund it !
Counting on parents (or taking them for granted) for funding their dreams, and for free food and stay is NOT helping anyone.
Least of all the parents who may end up dipping into their retirement nest-egg.
Btw, Subra, the example of the 34-year-old daughter and her family is not so different from the other recent case (which you had posted on subramoney.com) where the poor father had a ‘nikhattu’ son-in-law !
Shankar
If we talk to this to the daughter/son who are already in bad situation, is really very difficult situation. No need to mention that people will call you as jealous and stone-hearted even by the wife.
So I think the best way to make it very clear from the beginning how things will be, as there will not be any surprise. Also this will enough time for the kids to plan and execute.
Any better idea?
Sarang
I had not been happy about financial understanding of my parents. My Dad continued helping his elder brother all through his life who on his part was careless, irresponsible, arrogant and thankless to say the least.
My mother set me goal of earning my own bread by age of 21. One of the happiest occasion of my life had been to take my parents and sister to dinner and proudly paying for it from my 1st salary 2 months before I turned 21.
Even today after about 17 years, message from my parents is clear. If you face any issue in your life, feel free to come home. You will eat exactly the same food we eat. You will sleep on exactly similar bedding that we use. Don’t expect anything beyond this from us.
Reading this article makes me feel, my understanding of my parents understanding of finance was wrong!
Raghavendra
Subra Sir,
Very valid points on the need for everyone to know about financial planning, plan and act accordingly.
As regards education, in today’s scenario where Engg seat costs ~ INR 1L per year and and MBA costs anywhere between INR 8-15L (Tier 1 and Tier 2 institutes, i am not talking of IIMs and ISB types here) and that the avg salary for an engg grad is ~ INR 4-5L ( forget the Google, Microsoft’s of the world, which may be a far lower population of grads bagging offers) and that of an MBA grad ~ INR 5-9L, kids should also realize the ROI factor. Also, is there a merit in quitting a good job, doing MBA for 2 years and then joining a firm at a measly hike or the same level as earlier? Along with financial planning, it is a career orientation and returns question; in my opinion.