Most parents think that they do not need to teach their children how to manage money and the value of managing money in the right manner. They believe that this will be taught to the children as part of their curriculum in schools. The reality is very different. Personal finance is not taught in schools and by the time children reach college it may be too late to correct this mistake. Therefore, the onus falls on parents to teach their children this critical skill. As parents, we have to see ourselves as the primary source of financial education for our children. The earlier we start educating our children, the better the chance of ensuring that our children grow up to become financially literate and responsible people. We are listing down some strategies that parents can use to share knowledge of money management: Lessons should be unique if you want the message to sink in. To start with, parents need to sit down with their children at eye-level either at a table or in the child’s room. Keep the mobile phone and other distractions aside for some time and start by emphasizing the importance of the conversation. It needs to happen at their own level and in language that they understand. Irrespective of how young the child is, the effort of making this conversation happen is worth every rupee. Money mistakes made by parents in the past can serve as a good guidance for teaching children about money. Past mistakes is not a disqualification for teaching but can in fact help to get your point across to children. Parents can explain how the mistakes could have been avoided and provide documentary proof as a support. Children will grasp the learning much faster if have actual figures to refer to; parents can explain how much money was lost because of the mistakes. Reinforce your Teaching constantly: Make it a point to involve your kids in any transaction where you have any opportunity to save. Even if it is saving of only 5% – 7% on account of a cash back offer from your debit or credit card, it can go a long way in reinforcing the benefits of saving money. Encourage children to save more money by opening a bank account for them. Even though the bank a/c may not earn much interest, it will go a long way in making your children appreciate the benefits of saving money for the future. Budget pocket money or allowance: First of all, it is a good idea to give an allowance to your kids on a defined frequency. There can be various options to consider on how to pay an allowance to your child, namely: “Earn money for tasks” allowance: The child is expected to complete certain house work or tasks on a regular basis and is paid for his efforts. The child will see a direct correlation between the effort and the money he or she receives. If for any reason, the task is not completed, then the child is not given spending money. “Pay as needed” allowance: Children do not receive an allowance on a regular basis but request their parents for money as and when required. Here the child may or may not be helping the parents with household tasks. Secondly, as this money does not come on a regular basis, the child may not be able to save for future expenses. Unconditional allowance: The parents give a fixed amount to the child on a weekly or monthly basis without any precondition of doing any tasks. This method allows the child to manage money on a regular basis similar to a salary payment. The downside of this method is there is no correlation between efforts and the payment made. Hybrid allowance: Here this child is expected to do certain basic tasks for free as a contributing member of the family. The child will be paid for completing larger tasks like cleaning the fans, windows or cupboards. Whenever the child wants more money, he or she can take up a task or job and receive payment on completion of it. This method teaches the child that the harder he works, the more money they can earn. This is of course, very similar to our real world. Whichever method you as a parent choose to pay an allowance to your child, encourage them to create a budget before they receive the money. For e.g., if the weekly allowance is R1000, you can suggest that R200 should be saved, R 200 can go for charity (a very important concept your child needs to learn from a young age) and the balance can spent as they like. This budgeting will help them plan for their future purchases and also help them manage their finances when they become full grown adults and earn their independent incomes. Let us know put down some action plans for execution of the above strategies. As Steve Jobs once said, “To me, ideas are worth nothing unless executed. They are just a multiplier . Execution is worth millions.” Let’s start with shopping for your groceries at your nearest supermarket. Shopping with kids can be a nightmare; or a great way to teach them about budgeting, if you can spare some extra time: Create a food plan followed by a shopping list: Get your children to help create a food plan for a week; then create the shopping list to fit your weekly grocery budget. This will teach your kids about budgeting, planning ahead and checking out any discounts being offered. Getting the best price: Comparison shopping is a great way to teach kids about money and how to get the best value for your rupee. You can help improve your child’s math skills by challenging them to identify the best deal based on the product quantity or number or servings. Making smart choices: Encourage your child to decide between several competing brands including the store brand. You may end up saving a lot of money provided you are comfortable with the product quality

Our relationship with money starts at an early age when we notice or parents exchanging coins or notes for all sorts of stuff we like. The understanding of money grows as we start getting our pocket money. Slowly, we get more exposed to money and we start forming our financial behaviour and habits as we progress through these years. Once we start earning, we perhaps either continue or form new behaviour and habits, depending on our knowledge, understanding and our live-style needs. These experiences and beliefs may last throughout your life. The challenges however only multiply as we continue in our lives, have families, dependents and life goals. Some concepts are very important when we talk of any investment journey. Having a good understanding of these concepts and ideas will go a long way in developing a strong foundation for our future financial well-being, irrespective of our age. In this article, we will talk about 5 important concepts and ideas for wealth management. These can also be viewed as long-term strategies which, when practiced diligently, can help us strengthen our finances and reach the goal of financial well-being earlier. Have an Evolving Appetite for Risk William Faulkner said: “You cannot swim for new horizons until you have the courage to lose sight of the shore.” Investing is an art that is backed by logic. To master this, one needs to have an appetite to take calculated risks. Perhaps the biggest risk to your financial well-being is not taking any risk. Your willingness to take thoughtful and calculated risks is in disguise an opportunity to build wealth as you grow. You must remember that to create wealth, you have to earn ‘real returns’ – returns above post-tax, rate of inflation on your investments. Anything below that is in fact losing wealth. For eg., even if you are earning say 8% on your bank FDs and fall in the highest tax bracket, the post-tax net returns would be just 5.6%, meaning with inflation at say 6%, you are reducing your wealth by 0.4% every year! Always calculate your real returns as a test. Patience and Discipline To yield good returns on long-term assets such as mutual funds, one needs to have patience. This will come from understanding the asset classes and their behaviour. There is no shortcut to success, similarly, any appreciation in assets takes time. Being impulsive and investing without adequate knowledge can lead to financial losses. Discipline when investing in equities can lead to superior returns, as ups and downs in equities is a normal phenomenon, staying invested in quality assets is key to value creation. One very good way of having discipline in investments is to invest through SIP in equity mutual funds for long term wealth creation. Diversify Your Funds The best English proverb when it comes to investing is ‘don’t put all your eggs in one basket. This is an old yet effective way to explain the importance of diversification when it comes to investments. Diversification, whilst not fully guaranteeing losses, helps spread the risk of investments to help reach long-term financial goals. Diversification can come across different asset classes and with different funds/products within a chosen asset class. Broadly the asset allocation is always between equity and debt. Some may even add gold and real estate to this equation. Diversification is dictated primarily by your risk profile, investment horizon and returns expectations. It helps provide contingency to adverse effects in one asset class. Your MF distributor or investment expert shall in a position to guide you on the level of diversification required by you. Have Equity Exposure Investment should be made keeping in mind your risk appetite. This is influenced by many factors including; life stage, income, age and experience of investment. However, for wealth creation, the equity asset class emerges as the undisputed winner amongst all asset classes. For young individuals with income, taking higher risk is recommended as compared to a retired individual with limited or no income. As said, the choice of an asset class is dictated by risk appetite and investment horizon. However, when it comes to returns expectations or required returns for achieving financial goals, the most likely outcome will be equities. There is also a lot of ease, convenience, flexibility and tax advantage while investing in equities as compared to physical assets like real estate and gold or debt investments. However, it is a more volatile /risky investment and hence prior understanding, risk assessment and guidance from experts may be required. Focus on Financial Plans Lastly, we strongly recommend having a working financial plan, always. You won’t reach anywhere, achieve your life goals, financial independence, unless you have planned it first and are regularly tracking the same. It is critical to start investing in opportunities that are aligned with your larger financial goals. One should be focused on staying on track to reaching these goals through remembering that long-term value creation takes time. Get in touch with your financial guide /expert /distributor to know more about this.

Congratulations, You made the right decision to buy insurance. Now for the hard part. Buying insurance is not an easy, straightforward process, Irrespective of the type of insurance. Be it health or life insurance or any other type of insurance, today, there are multiple insurers to chose from and also multiple choices of products available. Even this is just one side of the story. There are other things critical before and during the insurance buying process. In this piece, we will deep dive into this process and explore some important elements of insurance buying. For the sake of convenience, let us break up the insurance buying process into the following 4 steps. Need Assessment Product Selection Application Process /Proposal Post Purchase Let us now explore these points in detail. Need Assessment: The starting point for any insurance purchase is obviously deciding what type of insurance is needed. A comprehensive need assessment to holistically assess your insurance needs should be done regularly, perhaps once every couple of years at least. Need assessment would mostly cover personal risk areas and related solutions like health, life, personal accident and critical illness insurance. Beyond this, covers like motor, home, fire & marine, shopkeepers insurance, professional liability /indemnity, etc, and even Covid-19 related policies may be explored on a case of case basis. For this article, we will limit our scope to the personal insurance covers only. Buying any personal insurance product depends on a lot of factors like your age, your life stage, number of dependents, existing covers, etc. After a product is decided, the next important question is how much cover you should have and the term of the cover? This again will depend on your earnings, lifestyle, the number of dependents, probability of risk, metro/non-metro city, etc. Needless to say, the higher cover taken at an early age, where medical issues are yet to arise, is highly recommended. Product Selection With multiple insurers and products, all with different features again is not easy. The right product selection is very crucial, and you will need to go into details to clearly understand the product features and even policy wordings. One important element here is to ensure that the premium fits in your pocket for the required cover. So an optimal balance may be required here. Another choice here is that of riders. Obviously, riders do offer some advantages but may not be always preferred and excessive riders are not required. Stand-alone products, like say critical illness, “may” offer better coverage and features rather than having them only as a rider. To sum up, with the product, the cover, premium amount, premium paying term, policy term and riders /add-ons will be decided at this stage. Application Process: The insurance buying process normally starts with the quote generation by your insurance advisor which will have the short-listed products. Upon selection of the product with cover, the proposer will be guided to a proposal form. The proposal form is the most important and basic document required for the insurance contract between the policyholder and the insurance company. It includes the insured’s basic information like address, age, name, education, occupation etc. It also includes the person’s health status and medical history. The proposal form helps the insurance company to calculate all the potential risks in relation to the insurance policy and hence deciding the premium amount. Needless to say, this has to the filled in as per the principle of ‘Utmost Good Faith’, which we would like to briefly cover here. After submission of the proposal form and payment of the premium, the process will end for you except in cases where the medical test, from an emplaned doctor with the insurer, is required. After this, the proposal is received by the insurer who is free to review the details and either accept or reject the proposal. Based on the information disclosed, a ‘medical underwriting’ may also be done by the insurer. Post Purchase. After the insurer is satisfied with the details required, the policy will be issued. You are expected to keep all the policy documents safely and handy at your end. Today, insurance policies are also being saved in digital format in your E-Insurance Account, which may be applied for /disclosed during proposal form filing. It is important to check that the details of the policy, including all personal details and disclosures, is accurate to avoid any issue in future. Once you receive the policy document in hard copy, please check all the key details properly. In case of life and health/PA policies do check the medical history, occupation, etc is captured correctly as you have declared. For vehicle insurance, you must check the registration number, fuel type and claim history. In case you find any discrepancy, please contact your adviser to make the required corrections in the policies. If everything is in place, the process of insurance purchase ends here. An important point to note here is that policyholders get a ‘free look-in period’. If for any reason you feel that the policy terms & conditions are unacceptable or there was any mistake in buying the policy, the policy may be returned. A refund will then be processed, less any expenses and proportionate risk premium for the period used. In brief: Identifying your insurance needs, deciding the appropriate cover and term and closing on the right, the suitable product is easier said than done. We would strongly recommend that the readers approach their insurance advisors for the right guidance. Please note that, unlike investments, buying insurance is a long-term contract that can have serious consequences when an unwelcome event happens. You may not buy another policy of similar nature for at least a few years, if not more, and thus, it becomes even more critical that the right decision is made, something you don’t regret later. To kick-start the new financial year in the right spirit, we would urge everyone to undertake a holistic need assessment with their insurance advisor. We wish you a safe,