Immerse yourself in financial literacy from an early age!

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oi-Sunil Fernandes

By Raghav Iyengar

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Since 1964, the birth anniversary of Indian Prime Minister Jawaharlal Nehru has been celebrated as Children’s Day in India. He firmly believed that “the children of today will make the India of tomorrow”. According to data shared by the government, the average age of India’s population is 29, making it one of the youngest countries in the world. These young digital native workers, with a flair for disruptive technologies, manufacturing automation and internet services, are expected to help propel economic growth. India’s demographic dividend in terms of youthful population is believed to be a distinctive advantage for years to come.

In such an environment, financial literacy becomes one of the most important (but often overlooked) attributes of young people. Certainly, there is a welcome change among young professionals who are proactively engaging in their investment journeys. However, it is not uncommon to see people with limited money management knowledge invest in the markets and react to every short-term market move or personal bias, ultimately resulting in an unsatisfactory experience.

Money management is one of the biggest concerns among young adults today. People spend most of their adult life worrying about their finances because they rarely take the initiative to learn money management until the first paycheck arrives! By learning to navigate the path of money management from an early age, individuals will be in a better position to take today, to collectively examine some of the key reasons why we should not only involve children in financial decisions active decisions about their travel wealth management. Taking advantage of Children’s Day, to touch on just a few of the main reasons why financial literacy is important from an early age.

Understand the difference between needs and wants: As adults, we are aware of the distinction between our needs (necessities) and our wants (desires and aspirations). However, for children, it can be easy to misinterpret a need with a want. By teaching them about money, you can teach them how to balance their needs and wants without incurring debt. A basic understanding of financial management will go a long way in helping guys plan their spending. For example, a young adult on vacation might be able to come up with a strategic plan that will help them enjoy the whole experience without burning a big hole in their pocket.

Learn the Value of Money: As a parent, at some point you would probably have said, “Money doesn’t grow on trees!” (and most of us have even heard it from our parents!) Learning the value of money may seem like the most tangible reason for financial literacy, but its importance is timeless. Although children may not be able to understand complex financial concepts at a young age, they must learn to prioritize and manage their finances for everyday activities such as buying toys, participating in social experiences such as concerts, games, visiting parks, etc. financial education can help children understand delayed gratification, diminish their sense of entitlement, and develop responsibility

Demonstrate the importance of credit and debt management: We rarely explain to our children the importance of having a good credit rating or we show the need not to have unjustified debts. By the time these conversations begin, they’re probably navigating through the perils of some financial decision that has either resulted in poor credit or thrown them into some form of financial distress. However, it is up to parents and educators to change this position. Using gamification as part of not only educating kids on the difference between the two terminologies but also enabling them to chart their way out of a circumstance will definitely go a long way in helping kids understand the value money and the repercussions of imprudent financial management. the decisions

Explain the importance of digital trust: Although the digital world has opened up new gateways for financial literacy, it has also made us vulnerable to multiple threats. It is therefore imperative to teach children the importance of protecting their account information and password to avoid online scams. By encouraging them to create fact sheets, children will learn from an early age not to blindly trust information available in the digital world or social media. Also, warn them about the danger of opening strange and suspicious links, even if they appear to be from a friend. In the real world, a smart and savvy consumer mindset is another important part of financial literacy. Motivate kids to do a little research before buying online about return policy, comparing prices and reading online reviews, to help them make smart financial decisions

While there is no standard approach to imbibing financial literacy at a young age, parents and teachers are free to experiment in fun and engaging ways (possibly through gamification or creating ‘a chat) that can generate proactive interest. Unlike in the past when information was rarely available, today children and young adults have all knowledge at their fingertips. Technology has simplified investing, so it’s essential to introduce your child to the concept of digital finance so they can make informed financial decisions.

Immerse yourself in financial literacy from an early age!

To wrap up this article, let me share an interesting adage from Warren Buffet that says “I made my first investment when I was 11. I was wasting my time until then.” As young India regularly steps in to spread its wings, creating an environment conducive to financial learning is of utmost importance.

(Raghav Iyengar, the author is the commercial director of Axis AMC)

Disclaimer: This press release represents the views of Axis Asset Management Co. Ltd. and should not be relied upon as the basis of any investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited, nor Axis Asset Management Company Limited, its directors or associates shall be liable for any damages, including loss of income or loss of profits which may arise from reliance on the information contained in the present document. Investors are urged to consult their financial, tax and other advisers before making any investment decision. Statutory Details: Axis Mutual Fund was established as a trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability limited to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment manager: Axis Asset Management Co. Ltd. (the CMA). Risk Factors: Axis Bank Limited is not responsible for any loss or loss of profit resulting from the operation of the system. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. CMA reserves the right to make changes and alterations to this statement as needed from time to time.

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Article first published: Saturday, November 12, 2022, 4:28 p.m. [IST]

Louis R. Hancock