What is the best gift you can give to your child?

We all give them our best. No doubt about that. We parents sacrifice to give our children the best schooling, best after school activities, best clothes, best toys, best food and best amenities. But other than the schooling and activities, there is hardly anything they will remember or have the worth of on these hundreds and thousands spent over material things. Toys, clothes, mobiles, bikes shoes, watches are all momentary or may be a little more than momentary ways to give our kids a worthy gift.

In my opinion, there are a few very important things that we need to gift our kids as early as possible.

•  Teach them about sense and value of being happy.

Young minds are most easily lost and assume those big cars, partying, branded clothes, drinking and pubbing brings happiness. And then when they become adults, these kids are more likely to get sucked in more such useless, worthless and expensive habits thinking this is LIFE. And when these adults become parents they continue running after GAS BALLOON like lifestyle, spending beyond their means, using credit cards to meet their ends, buying things which will have no value or security to their kids or their old age.

So teach them young about how to remain content by talking to their wants and quizzing their wishes. Most of the time, they will understand very easily provided, YOU are aware of the real meaning of happiness. Provided you know the difference between what are your real needs and what are your wants and wishes. This is the best gift you can give to your children.

• Teach your children the value of money.

It’s very easy to go and buy an expensive toy or things that your child cries for but it becomes an easy habit for the child. He or she starts believing that buying expensive toys and things are no big deal for you. The value of money falls in his/her eyes.  

They play for a day and forget after a fortnight.  There is a big gap between pampering and explaining, one is easy way out and the other has the long term value.

An easy way would be tell them that they can buy out of the money they earn or collect. That automatically changes their perception about money, toys and their value.

Ever since I have put my kids in this mode, they have stopped asking me for new toys. They can see how many days of chores they have do to collect the total amount on a toy. Suddenly the toy does not look that much attractive any more.  That’s when they understand the difference between their need and want.

Infact many adults are caught in this vicious loop of wants and need. The banks have fanned their fire of wants by inventing the bank’s evil apple called credit card. What was just a want and unaffordable earlier, is easily broken in part payments with huge interest which we do not mind paying. Then as people delay and default, banks mint money, the people become poorer. Should we blame the banks? Do we ever blame God for the apple?

Honestly, I find cards a very good way to pay all my bills online, earn 5% return on the billings and also able to see where the expenses are happening most. Helps me not carry huge amounts and prevents me from making physical payments. That’s all. I do not ever let it cross 1/ 10^th of my limits. I never buy anything on installments even if it is 0%, I never split my bills into installments. Cuz I know, what a dragon it can turn into with the late fees and penalties @ 3-5% per month. Banks are actually very fond of people who default or pay late fee. They do lot of tricks to make you feel good about letting you split the bills or allow you to pay late. If you are not careful there will be many a times fees which they should not be charging you at all as promised but because you do not question them, they will continue to charge you. Some examples are annual maintenance fee, penalty for account not maintaining a min balance which changes as per their wishes and so on. So be aware and ask them for every penny they cost you. And when you have learnt, do pass this knowledge on to your children. Many parents think we should not burden our kids with the information about the financial health.

Ideally if you are not caught up with the cards and your wants, you will not have any financial worry. But discussing with kids has always helped. Teaching them financial terms early on will help them from the phobia of handling their own money, getting ready to handling businesses better, not getting intimidated by the taxes, investments, returns, understanding the value of sharing profits, short and  long term investment methods and the fundas behind them.

• Leave your kids with a legacy of security .

Security in terms of finance. Your aim should be high. You do not want your kids to start from the same step like you did. Where you peaked is where your child must start his / her journey of life. But we goof it up by spending more than necessary on useless things and build no wealth for our kids. Give your kids a chance to explore the world differently. Start them on lessons of saving small amount every month and teach them the importance of the word Compounding. As per Einstein, compounding word has magic in it.  He said that the number 72 should be your magic number.

 If you want to double your money in 10 years, divide 72 by 10 years. 7.2 is the rate of interest at which your money must be invested to double it up.

Similarly, if you know you can save @ 8.5%, divide 72 by 8.5 and you will get the number of years in which your money will double up.

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Let your kids know that they can easily work on their dreams with least stress on how to arrange for the funds. If you want to leave a crore to your kid when they are 30 years , start saving 6000 per month by sacrificing those movies and dinners by one less every month. Infact best attempt that worked for me was to first transfer all the money to the places where I invest money. Then you are forced to live in the balance amount meagerly or kingly depends on your imagination and needs. My wants are very limited and I shut my brain when someone tries to show off their fake lifestyle. Like Arjuna you too must have those few goals always in front of your eyes like creating wealth for your kids, living athe same lifestyle like you do today and probably going on a world tour with your spouse for a six months long trip! 

• Leave your kids with the legacy of values.

For this you yourself need to know your own values. How much can you stay away from getting corrupted or encourage corruption? How easily you get lured to anything material? How much you lie to get your work done? How you treat your spouse and kids? How much you value your family? How often you stand by people who are deserving and honest? How much you value simplicity? How much you do for the society? And my favorite, how much you encourage passion versus rat race?