Should you listen to your parents when it comes to financial advice?
Check out the financial advices that you should listen and ignore.
Typical Indian parents are always full of financial pieces of advice for their millennial children. Most of them think GenY or millennials are financially irresponsible and cannot settle in life until they walk on the same path. While experience is the most prominent teacher of all, not all bits of advice from experience can be practical and appropriate, especially when there’s a wide generation gap and transformation in risk appetite and lifestyles.
So, here we present some of the most common financial advice given by Indian parents and should you obey it or not.
- The stock market is a gamble. Donâ€™t fall for it â€“ Donâ€™t obey
While it is true that investing in the stock market without much knowledge and research can be risky, investing in equities can be a game-changer in the long run. Investing in the right stocks for a longer period has created humungous wealth for many investors in the past. In fact, if you invest systematically in equity, it can mitigate risk factors and help your money grow as well.
Tools like Systematic Investment Plan (SIP) can help you invest as low as Rs. 500 every month in the stock market through equity mutual funds and generate wealth over the years.
- Think long term â€“ Obey
We can all unanimously agree that our parentsâ€™ generation was thrifty and had a desperate habit of saving money for the future. Despite having minimum disposable income, fewer luxurious needs, and pension cover, GenX has managed to build a cozy cushion for their second innings.
Today, our lifestyles have drastically evolved, consumption has increased, inflation is skyrocketing, and very few employers provide post-retirement benefits. It is prudent to plan and save for our golden years right from our first paycheck in such a scenario.
- Gold is an investment â€“ Obey
Any investment that appreciates the value of your money over a period is a good investment. Gold, as an asset class, has withstood inflation and the global financial crisis in the past. Therefore, buying gold is an excellent way to diversify your investment. However, buying gold in physical formats, such as jewelry or gold coins/bars, can attract making charges. Investing in gold via sovereign bonds or Gold ETFs can be an economical way to invest in an inflation-proof asset.
- Save for rainy days â€“ Obey
Despite having insurance cover or a very helpful family or friend circle, sometimes unexpected events can create a dent in your personal finance. Building a contingency fund can help you sail through any financial crisis without much trouble.
- Donâ€™t earn while studying. Focus on academics alone/first. â€“ Donâ€™t obey
One of the most common pieces of advice, in fact, taboo, amongst Indian parents is ‘earning income while studying.’ Most parents cannot stand the idea of their child working while studying at the same time. They get offended if the child expresses their desire to earn and brush off the idea claiming it’s a nonsensical westernised concept.
Itâ€™s high time the parents realise, and children normalise that earning while studying is not done out of misfortune but out of choice. On the contrary, earning from an early age develops a sense of responsibility among teenagers and helps shape their personalities as well.
- Never take a loan â€“ Donâ€™t obey
Taking a loan was considered a sign of incapability until the early 80s in India. It was not a popular concept and looked down upon by many urban folks too. However, today, buying things on loan and paying them back in instalments has become quite common. From school fees to mobile phones, you can buy everything on loan. Thanks to rising aspirations and increased disposable income, every household is now acquainted with this term. A credit card is one type of a loan where one can even earn rewards for taking the loan and benefit in various ways when paid back on time. Parents have an inherent urge to guide their children about financial matters. Since their hard work and guidance is what ultimately helped the child stand up on his/her feet, it is important to listen to parents’ pieces of advice. Just remember to think holistically and put our best financial foot forward.