Making Money Grow


Do you know how to spend and save money? Pooja Patel throws light on the need for children to save.


If you save just Rs 10 a day,  every day and if you are 10 years old now, by the time you are 35 years old, the total amount in your account would be close to Rs 5,60,000 at the rate of 12% growth. How powerful is that? This is called the power of compounding. So what are you waiting for, start saving now!

Today, being able to spend money has become a necessity. Be it a trip to the mall, a movie or an outing with friends, one needs to know one's cash reserves before one can spend the money. With the fast paced life we lead, many adults use credit and debit cards, or "plastic money" as it is often called, to pay for the goods they buy. But the bills for these cards need to be paid too. So no matter what mode of payment you use, spending needs to be monitored and accounted for. If you don't save more than what you spend, you will end up in trouble. 

Gitanjali Dutta, a mother of two children from Delhi opines, "I give my children a fixed monthly allowance for all their expenses and they buy whatever they want from that money. I don't give them extra money and encourage them to save. I have opened bank accounts for them where they deposit the money they save. Fortunately, I have never experienced the tantrums children throw regarding extra pocket money. My 14-year-old sonís friends have mobiles but he does not complain as we have made it very clear that he will get a phone only after class 10. I think it's through the way parents bring up their children that the importance of planning, saving and budgeting is imbibed by children."


A lot of banks today provide bank accounts with debit cards for children and this system is very effective as it teaches children responsibility at a young age. Neepa Surana, a class 7 student from R N Podar School says, "My parents give me a fixed monthly allowance of around Rs 300 from which I have to buy whatever I need. So I divide this 300 into three segments. The first 100 I spend on basic things like books and stationery that I need during the month. The second 100 is spent on buying things I want like an ice-cream or some other food. And the third 100 is saved. I save that part every month so that in case of any emergency, I can use that money. I think saving money is very important. This is one habit we must develop as children. I deposit all my saved money in my personal bank account, which my parents have opened for me."


Ashu Suyash, Managing Director and Country Head - India for Fidelity International, advises, "There are many reasons for which we should save money. We all want to develop our inner potential and live life to the fullest. To some, this might mean attending the best colleges available. To others, it might mean developing a passion like music or sport into a career or even being able to save to buy new gadgets like an iPod, mobile phone or video games. We all want to be worry free and enjoy all the good things in life. One of the elements we need to have in place to achieve all these things is enough money, which is possible only if we have been saving. We should keep in mind that things tend to become more expensive over time. But the good news is that the earlier we start saving, the more we can save thanks to the magic of time and compounding. We do not need a great deal of money to begin with, especially if we start saving as children. All we have to remember is to set aside a certain amount of money regularly and let the pot grow!"


Saving money does not mean you can't spend. It simply means spending to buy things that are needed. Managing your own expenses will give you an opportunity to understand the economics of money. So if you get a monthly allowance, take it as a challenge and try to prepare a budget and spend and save accordingly. Fay Fernandes, a banker says, "It is very important for children to save money and it is not difficult to do it. Younger children can start with collecting the money in a piggy bank and then, at the end of the month, they can give it to their parents to deposit it. Or else, after collecting a small amount, say about a few thousands or so, they can get deposit certificates which can be useful later. These certificates are of great use when children turn 16 and need the money for their education. Children should also learn to read and understand passbooks to keep a track of the money they are managing."


Be it credit cards, ATM withdrawals, interest rates or the balance in a bank account, your parents will have the answers to your questions about money. So when it comes to managing your finances, it is always a good idea to talk to them. But it is also important to take the initiative to save on your own. An effective way to do this is by preparing a wish list in which you can write down all the things that you want to buy. Then go through the list and think about why you want these things. Which items on your list are necessities and which do you want just because your best friend has them?  Before going out and spending your money, also think about the quality and price of the items you need. Are they worth the money you will spend? The best way to spend and save is to judge and analyse.





- Start with saving just Rs 10 a day. The easiest way to start saving is to start with a fixed amount of savings everyday.


- Keep aside some fixed amount of money everyday and when you have collected a good amount, put it in the bank.


- Ask an adult to help you open a bank account if you don't already have one.


- Once you have accumulated some money by saving everyday, start with a fixed deposit of that money in the bank.


- If you think buying something is worth the money spent on it, then spend it. But keep one thing in mind - if you spend that money, it won't be available to you for something else which you might want to buy later on. So think before you spend.


- Another thing you can do before buying something is to ask yourself how long you are going to use it. Your answer will tell you if it is worth spending money on. If you think you will only receive only a temporary benefit from that thing, ask yourself if it is worth buying. If your answer is "no", let the money grow and multiply by saving it in a bank account or fixed deposit.