Parents who talk to their kids about finances give them a strong foundation to understand how to use money and credit wisely? Yes or No I tweeted (that’s something new I am trying out,asking questions on twitter and or facebook) . Within minutes I get a tweet back from Chethan. And when I asked him to shares his lessons he happily agreed. This article is about what he learnt about Money from his parents and how he applies it now as an adult.

About Chetan S

Chethan S is GIS Professional who loves the power of Social Media in changing things. His interest range from GIS, Linux, Social Media, Telecom and Personal Finance. He is from a typical South Indian middle class family. His father, now retired, worked for a leading co-operative company in accounting section and mom is the homemaker. He is nearly three years old in Software Industry after completing his Master’s and his sister is about to complete her Master’s. You can follow him on twitter at @gischethans

Chethan often shares interesting articles with bemoneyaware regarding personal finance on twitter such as OMG! Personal loan to construct house, later for interiors, associated EMIs & how hell broke loose – cc 

What I Learn From my Parents about Money

Life is full of opportunities to make choices and our choices made today shapes our future tomorrow. Everyone wants to lead a quality life and this makes it essential to have enough money in hands. For this one needs to save money with a vision for future needs. Note the bolded text – I say with a vision to highlight the importance of planning. I sincerely believe that things like importance of saving money needs to be learnt early on in life and parents can play a significant role in this. In this post I am trying to make an account of how I learnt money matters from parents. Examples I cite below do not directly mention money but are sure shot indirect ways to save money.

My Childhood and Money

Right from childhood days (when a kid is 4-5 years old or even little earlier) we humans are demanding. We see a nice toy in another kid’s hand and we feel time to have it. Naturally kids know how to make a fuss and parents yield to that! After all these days it is one or two children in a home and parents feel there is no world beyond their kid’s happiness. While this is all good, a kid who demands chocolates today and gets the demand fulfilled today will not see anything wrong in demanding an iPad or a two-wheeler tomorrow – not to mention the speed at which the child (now adult) expects the demand to be fulfilled. On a daily basis, we read news about how teenagers resort to harsh measures like suicide when their demands are unfulfilled. What I’m trying to stress here is, fulfill your kids demand – no problems there, but make them understand the necessity of having patience. Though certain things are well within your means make kids wait for a day or a week. In my case when I demanded toys or a small gadget, my mom made me wait, sometimes till the next final exams are over. She also used to encourage me to perform well in exams to earn the demand as a gift. This makes the toy sweeter and I used to have ample time to play during vacation.

On several occasions I was told by my mom that money does not come easy. I was often reminded, “Your dad has to work from morning to evening to make our lives comfortable.  You must learn to appreciate the hard work he puts in everyday.”

These learnings are still fresh in my mind even today and when I feel the impulse of buying something, I decide to wait for up to a week. Several times I did realize that the desire to buy was triggered just due to some random email discount coupon sent by the online retailer and not due to real need! This results in money savings.

My Family and Investing or Growing Money

Growing the money you have demands that you invest it for reasonable returns. My parents knew the importance of this and made investments in safe avenues. No, dad did not invest in stock market (except for few paper stocks of established brands subscribed during IPOs) and had very few mutual funds. Back then there was no internet and he had seen several of his friends book losses in stock market! Nevertheless, we had several Recurring Deposit accounts, fixed deposits opened at regular intervals, investments through different postal department schemes etc. Investments were tax efficient. I must also add that our risk appetite was minimal – we could not afford to lose money due to wrong decisions. The costs were rising in all fronts – particularly growing children means substantial education expenses. Mom always used to time Recurring Deposit maturity such that they mature by end of May to pay our fees in June. Dad’s investments were timed for the February – March tax season.

At the same time, my parents were smart enough not to trust investment avenues which offered unrealistic returns. Those days they were in the form of chit funds and deposits with Maharashtra Apex or ICDS. Many of our relatives and friends lost money after investing there. Thanks to our diligence, we never lost money like that.

My Experiments with Money

I developed interest for money by counting coins! This made my Maths strong and parents used to encourage my interest. We kids were not kept in dark when it came to money. Discussions on money were encouraged in our home and I used to discuss about taxes etc. with my dad after I read newspaper articles on finance and investing. As far as my memory goes, I remember talking about money since I was in 7th Standard.

I got my first savings account when I was in 11th Standard. It so happened that even bank officials questioned my mother’s rationale on trusting a teenager son to open a savings account in his name. My mom didn’t look back and I never breached my parents’ trust by mishandling money. Even today, we don’t differentiate between my money, dad’s money, mom’s money – it’s our money! There was never a thing called pocket money at our home and parents never locked cupboards – we trusted each other. We kids used to justify our needs and parents never said no to things. If a need was unjustified, we were made to understand that.

Stock markets was something which fascinated me but no one in our circles had a strong know-how of them. It’s only after I started working that I invested in stock markets. I am still a small investor and studied things for at least an year before I opened my demat and trading account. Coming to investments, I have RDs in bank and Fixed Deposits. I started my own RD right away when I got my first salary. I didn’t blow it all up in the name of enjoyment.

How to lead a fruitful life with frugality

Leading a fruitful life and a little bit of frugality can go a long way in achieving your savings targets.

1. Cook at home – this is good for your health and will work to be a lot cheaper than eating out. After all if you ask me, it is not a value for money proposition with these restaurants. Hardly did Indian households have outside breakfast during 1990s – but now that seems to be the order of the day. Wake up, go for walk or jogging and come home with breakfast packet from the nearest hotel. What a way to start a day?!

2. Live within limits – Thanks to EMI culture, people hardly think before committing to EMIs. To make things easier banks have integrated convert to EMI right in the payment gateway when you pay for things online. Don’t fall into this trap. If you need to borrow money, never do it from friends or relatives – this spoils relationships. Borrow from a bank. Even if the interest is a tad higher, peace of mind is important. See if you can accumulate money for what you want to buy – say for LCD TV you can invest small amounts in RD every month and then buy it with your money.

3. Healthy lifestyle – develop a healthy lifestyle. When possible walk to office (I do this everyday). I see people walk for exercise and then drive to office barely 2 kms away. Even public transport is better. Walking or taking a city bus or cycling can simply take away a large portion of stress from everyday life thus adding to healthy lifestyle.

4. Budget Travel – I know people who take flight for a 1000 km journey instead of taking an overnight bus trip in a Volvo. Bus would set them back by Rs. 2500 – 3000 for a round trip but flight would cost up to Rs. 10000 for a round trip. How about investing the saved Rs. 7000? At least, that’s how I think!

5. No showoff – people buy branded clothes in the name of durability and primarily to show off. I see no point there and normally don’t go for them. At the same time, if I am buying a gadget I spend for a reputed brand. There I look at after-sales service, durability and not initial costs.

Related Articles :

• My experiments with money : My own journey with money. How I realised after having child that I am financially illiterate.
• If only I had taught him about Money when he was a kid.. : If you don’t teach your kids about money at young age, who faces the consequences
• An Interview: 20s and Money, : An interview with our reader Subbu  20 year old with a job, not married on his thoughts on money, financial planning,investment,insurance
• What are you teaching your kids about money?
• Kids and Money Conversations : Kids talk about money, directly or indirectly. Check out the conversation.
• Books on Money for Children
• Is It a Need or a Want? : Teaching kids about what is want or need.

Our website Bemoneyaware.com has articles organised on of salary, credit cards,debt, loans, investing,insurance which will be helpful for readers in 20s-and-30s  

So what lessons did you learn from your parents? How your money values are defined by what you learnt,directly or indirectly from your parents? What are you teaching your kids about money? With what sort of money values are your kids growing up? Who plays an important role in teaching kids about money – mother or father?