The Problem
Until you start earning, for most money related matters, you are dependent on your parents. You tend to form several financial habits and traits based on how the elders behave with money. This is in contrast to everything else that you do—be it the trend with the latest mobile phone or clothing fashion. The lack of financial awareness exposes you to either commit mistakes on your own, or depend on your parents to advice you on what to do with money. You take their advice, because emotionally they too would want you to believe that their suggestion or recommendations are in your interest and for your good.
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Blind faith in following whatever your elders say is not right. But, you would know this better because it is not as if you listen to everything that they have to say.
Example
Opening up PPF or having money in bank fixed deposits today is futile. The low interest that you earn from them barely manages to beat real inflation. Yet, for most youngsters having money in both these instruments are like religion, because parents put their money in these, so do you.
Suggested intervention
The initial working years in life is very crucial as it is the period where you have few financial liabilities. Just the way you agree with friends when shopping for gadgets or planning a vacation, mingle with people who are financially savvy with handling money. Be responsible to learn about money management and how you can benefit from it. Fixed return instruments worked for your parents, because as recent as a decade ago, returns from these were as high as 12 per cent. Instead of going in with what worked for them, look out for what will suit you.
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Tip
With nothing to lose, follow the principal of equity for the very long term approach. Start investing in equities through systematic investment plans. Even if you spare Rs 1,000 a month, you will realise its impact after two decades. You will also form the habit of investing systematically, early on in life.
