FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Make your teen a finance manager!!
“What is with these guys? They need a never ending supply of money. What do they think, money grows on trees? Last week it was for some educational trip from the college and this time it is some friend’s birthday party in some hotel, for which he has to buy new clothes.
With a teenager at home, one can never budget expenses or plan finances, trust me”, this was Aditya cribbing to his colleagues at work. That evening when Aditya was driving back home, his friend Prashant who lives close to Aditya’s house requested a drop. Aditya was more than happy to oblige and they got talking.
Both Aditya and Prashant had teenaged sons and they always shared notes on investing, parenting etc. Prashant recalled the morning discussion and said softly, “Hey Aditya, I tried a few things and it worked. Now my son is the deputy finance minister at home. Very helpful too. You know that?”
Prashant went about explaining
- Prashant gives his son Dhanush pocket money or allowance. Every 1st and 15th of the month Prashant gives him a specific amount. Dhanush has to manage all his expenses within it. They did have some tough time deciding how much this amount should be. However, Prashant agreed to give a bit more than what Dhanush would absolutely need. Dhanush should save up any extra money that he has not spent and use them for the birthday parties and extra clothes. No money is given on demand in between. Of course, Dhanush does borrow money once in a while, but returns it promptly, otherwise it is deducted at source from the allowance.
- This has helped Dhanush understand that only a certain amount of money is available and that he should manage his expenses within them. He has become so very creative and a very careful consumer.
- Last week, when they went on a family holiday Dhanush had so much knowledge of where to go for best deals and even used his negotiation skills to get a great holiday package. He knows where you can get great food, clothes, shoes, mobile phones, accessories at dirt-cheap prices.
- Prashant has now given the responsibility of maintaining the family budget on the computer to Dhanush. Dhanush has an iphone and tries everything new in technology. So both mom and dad shoot out a sms to Dhanush when they spend on something. Dhanush puts them up on an excel sheet, or some downloaded budgeting software. In addition, the tough part of this is that at the end of every month Prashant and wife have to sit for a Power Point presentation by Dhanush on how they have spent and how they can improve!
- Another place Dhanush enjoys going to is the bank. He says he goes there to enjoy the ambience as well as the ever-smiling receptionist, but frankly it is so very helpful when you have to just drop a cheque or pay some bills. The bank is after all on the way to his college and there are ATMs and drop boxes in every mall where he hangs out all the time. He takes all his fee DDs himself and gets his work done around in the bank.
- Stock markets are now his latest fetish. Though Prashant is a bit wary of the markets himself, Dhanush has taken a lot of interest and tracks the market on his mobile phone. Intelligently Prashant has put his son onto one of his investment banker cousins who Dhanush admires a lot and they do a lot of stock market research together. Prashant is not sure how this will help his family finances but is happy Dhanush is getting to learn a lot of things about the commodity he would use most in life – Money.
- When Dhanush came one day saying he wanted to take up a part time job with a neighbourhood juice shop, all hell broke loose. Prashant’s wife was wild. She started blaming and accusing Prashant of pushing her son to work as a waiter. She even offered to scrap the allowance plan and give money whenever Dhanush wanted. However, Prashant saw the benefit – Dhanush would learn dignity of labour, understand that money does not come easy and this would look great on Dhanush’s resume too. Prashant convinced his wife and let his son take up that job as long as it did not come in the way of his studies and on the promise that Dhanush would not use the money for undesirable things. It worked. Dhanush now takes pride in earning money, feels useful and now even empathises with dad for how hard he works.
Moral of the Story: The youngsters at home want to feel important. When a responsibility is given, they do not cease to surprise us on how well they can handle it. Teenagers should learn about money and they will best do it when the opportunities are presented to them. Give it to them.