Behavioural Change of Our Children's Towards Savings in 2021

 

Do you know in 2021 and in this new decade our children are at a big risk? The year 2021 is the beginning of a new decade. In this new decade, the biggest challenge being a parent is how to pass the message of savings and investment to the kids. 2020 has taught a huge lesson for the value proposition of savings.   In this article, we find that every parent is mentally challenged in 2021 and in this new decade. In the year 2020, we have witnessed many dramatic changes in our house getting converted into an office. Infarct work from home has finally lead loss of home. It seems that family members are living in the office and not at home.  To keep the family people happy good media and entertainment took the significant jump. 45 inches to 55 inches flat screen became a new member and Netflix, Amazon Voot, Sonyliv, Hotstar and many such things become part of our life.

 On the other hand, every family has witnessed significant ups and downs in terms of savings, cut of expenses and even nightmare of job loss/pay cuts impact on the family.  Netflix at 1000 bucks, Hotstar at 1000 bucks and amazon prime etc are the new expenditures of the family. Kids of any age are more glued to You-tube than cartoon network.

Internet usage has gone up significantly which demand a huge price for the same on monthly basis.  Money was being spent mostly unaccounted.  We have transformed our kids and their habits in this pandemic phase.

As Investment fundamentals have changed dramatically in the last decade and going forward it will change more dramatically but prior to that our expenditure habits have changed more dramatically.   Savings will face tough challenges in the coming days. The behavioural aspect of savings needs to be inculcated from an early age now. Well, that is the demand of the current phase of life. Before we pass the investment knowledge to the next generation we need to pass the savings knowledge. We need to work upon the behavioural aspect of savings, expenses and then investments.  

 

 Charity begins at home hence education about savings and investments should begin from an early age and that’s too at home.  We need to teach and explain significantly within the community for this behavioural aspect change over.  Why community when you can be a teacher to your kid only? Well, today having subscription of Netflix can be done through pocket money or pocket money contribution by several kids clubbing together.

 The habit of saving is very important no matter what age you are.  Even the usage of the internet is also part of savings and investments. Today’s generation does not understand the value proposition of anything as compared to an earlier generation. The reason is that today’s generation lives on the edge of smartphones. The word Struggle has been replaced with comfort and this is the core area of difference between savings and spending habits of today’s young generation and old.

Behavioural finance has a huge role to play in society going ahead. The next decade is full of challenges for the parents provided proper steps and process is not followed to control the behaviours of the child. The behavioural aspect of your child can be improved or changed provided you do that same for the community as a whole. It’s not you but all parents of a Housing society or schools needs to come together to for this behavioural changeover.

 Today’s the generation doesn’t have the idea of the pains through which their parents and grandparents have gone through to get better leaving. Today right from childhood there is a competition wherein children are given expensive gadget and expensive lifestyle just to maintain peer completion alive. Today’s

generation does not understand the value of money. There is no ideal age to inculcate saving habits in your child, but it can be taught slowly once the child turns five because, from that age, he/she begins to understand concepts of life. Their inquisitiveness should be used to educate them to understand the value of savings and investments which gives them long-term knowledge about wealth creation.

 The various factors which can be implemented to educate & build a savings habit are as follows:

•  Be it a boy or girl to understand the value of money in today’s life is really important and why saving is important and what are the benefits
•  It is  important for  your children to take the initiative in the household chore and understand how the budget is managed every month and how unwanted huge expenses can be managed
•  Parents should not keep children out of budget planning. Active involvement in the subject is the key to success for building awareness of savings and investments Give them a small amount to spend and tell them that in this amount of two things you can buy anyone. They should learn to spend the money according to the need for that, for example, give your children Rs 20 and tell them that u can either buy chocolate or a packet of chips. Let them decide what is important for them?
• Take your kids to grocery shopping. This will make them aware of expense management also how judicious mix of resources could create balanced shopping.
• Give your kids a budget and tell them how much to save and how much to spend. Give them a piggy bank wherein they can keep the saved money
•  It is very important to make your children understand the importance of saving. It will not just help them now but also in their future life. How to save where to invest how to cut down the unwanted expenses
• Open saving accounts for your children so that he can learn to manage the money. This is one of the biggest tools where all expenses related to the children could be discussed and they could be involved to manage their pocket money judiciously.
•  It is very important to teach your children how to differentiate between your needs and your wants. The difference between instant gratification and delayed gratification is an important aspect of financial management.
•  If your child demands a toy do not give that toy immediately For example if the toy is for Rs. 200 divides that amount and give your child every week Rs. 40 per week and do that for the next 5 week and ask him to save that money and buy that toy for him once he has saved the entire money  
• Girls are been taught at an early age how to save money whereas the boys are not. The reason is that girls are more prone to be involved in household matters compared to boys.
• Don’t try to control kids by stopping them from spending. Explain the concepts and the rest will be history.

 Conclusion:

Smartphone has changed the culture and competition among people. Building habits of savings are key to long-term prosperity in the family. Building the habit of savings and creating understanding for value proposition is always a difficult task provided with proper logics the same is understood to the children’s.

Active involvements into household expense management will make these children avoid the traps of extravagant expenses. Peer pressure management regarding expenses is another spoiled brat ruling today’s society.

This needs to be eliminated by the parents itself by teaching the kids about the value of money. Another factor which destroys the kids is the lack of time being provided by the parents and replacing the same with money or gifts etc. This is another killing instinct which should be taken care of properly. Parents cannot be replaced by gifts or money or excess spending.