This is not a typical ‘event’! It is a series of complex steps and starts almost at birth.
From birth a kid sees money, plays with it, counts, realizes the power it has. My daughter once told me ‘I want notes, coins do not buy anything’ – just an observation I guess!
So right from the age of 4 you can start teaching the kid the value of money and what it does. Not that all parents take the trouble to do it. I have no clue but many parents refuse to share how money is earned, spent, taxes paid, charities made and INVESTED for a rainy day.
IF YOU DO NOT TEACH YOUR KID ABOUT MONEY, who will? Do you think school and college will? No, they will not.
So let us look at a person’s relationship with money and the role of the family.
When you are about 8-10 years of age you have just started understanding money. You know what is the price of a house, the cost of a car, the cost of a loaf of bread and the cost of ice-cream. You know that your parents have had to slog to earn the money, to provide for a nice roof, put food on the table, pay your school fees, pay for vacations, – and generally for the day to day living. By now you have been told that the ATM which spews money whenever you want has to be filled by the hard work that the parents put in at the office.
By now you realise that the servant who comes home or the driver who drives the car are providing you services. You also realise that money is in short supply and has to be rationed. If you have sensible parents, they talk to you about money responsibly. If they are not sensible, they fight over money. It is time when you compare the people around you – and start making money judgements. You know that a person with a bigger car, house, vacation…..is considered to be rich!
At this time you are able to handle budgets and rationing of money. If you are told that you have a Diwali budget of Rs. 5000, you know that you can buy a dress for Rs. 4500 and Rs. 500 has to be spent on crackers! You have already asked for your first mobile phone and you did not like the budget of Rs. 8000 that your parents set for you. You have started realising the importance of budgeting, saving, etc. You are understanding words like inflation but are still too young to understand the implication of that word.
Stage 2: End of school to Completion of college education
You have finished school and wish to study further. You are now wondering who should be funding your education. Should you be taking a loan?
Should your parents support you?
Should your parents pay your full fee and board?
If they were to pay how do you plan to repay the loan?
Stage 3: (Just started earning…)
The next stage is when you have just started earning. The questions that you have to answer are:
Should you live with your parents?
If you do live with them should you pay rent? How much?
Should your parents subsidize your higher education? Like an MBA costing Rs. 2 crores?
How about paying them for food and other services?
Are your parents subsidising your expenses?
Will you be able to afford to live on your own?
Who will pay for your wedding expenses?
How should your wedding be celebrated? – a simple court marriage or a full blown Big Fat Indian Wedding?
You are buying some asset –
Should you ask your parent to pay for a portion of that?
Should you take a loan for the asset?
Should your parent be a guarantor for the loan?
If you do take a loan from them will you pay interest? Will you repay the loan?
One sibling is milking the parent – almost dry – will you interfere and stop (and risk your parents ire too!!)?
Sure you are earning well, but if your brother did not eat out of your parent’s capital, your parents could fund an Ivy League education – so you are caught between the devil and the deep sea.
You are now in your middle age, and you have grown up children in college
Do your parents need financial help?
Are they financially well off?
Do they need you to look after their finances?
Have their finances been well managed?
Are they in a position to comprehend the financial bombarding that must be happening?
Are they vulnerable to being cheated?
Do you need to forcibly look after their finances?
Do they have a will?
Are all their nominations in place?
Really the child-parent financial relationship is not ONE article but a series of articles! And each parent is different, as is each child.
Now all these questions have at least 3 sides – the child’s view, the father’s view and the mother’s view.
This is not simple.
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