THE LITTLE INVESTOR

Savings are no longer about piggy banks. This takes your child to the bank & initiates him into the art of saving…

Money! How you wish you didn’t have to slog day after day for that salary slip at the end of the month. How you wish money grew on trees after all. Imagine life without the paranoia of where the funds for your child’s education or marriage will come from. Without a care in the world about saving for a rainy day, or that emergency, god forbids. And, every time you land yourself in a financial mess, how you wish your parents had taught you the basics of saving… Well, are you teaching your kids?

FROM PIGGY BANKS TO ATMS

Don’t rule out the good old piggy bank yet. It has own fascination. Remember the joy of slipping little coins into the slit back and breaking it with bravado when you wanted to buy that surprise gift for your parents’ wedding anniversary.

There are numerous piggy possibilities. If your child is too young, buy him an attractive piggy bank; they come in various shapes and sizes. Some resemble cartoon characters, some look like iron chests, complete key or code. Keep it on your child’s table and every time grandpa gives him a tenner to buy a chocolate, encourage him ti put it in the bank instead. Tell him a chocolate wouyld melt in his mouth and be done with, but if he saves enough money, he can buy that Pokemon satchel he so craves. If it is a terracotta bank, you can only break it, but there are those that come with locks and keys. Spend a Sunday afternoon with your kid counting out the loot. Watch out for the super glossy shine his eyes take on when he realizes he’s saved enough for the latest Harry Potter book. It’s worth it.

BEFORE YOU BEGIN

Once upon a time, opening a bank account for a minor was a huge hassle. These days, however, most banks offer interesting schemes for children. But before you begin, remember you can open an account only if you are a parent or legal guardian of the child. You can’t open one for your niece, nephew or friend’s kid. Also, the account will be in child’s name but you will officially represent him/her for all purposes.

DOS, DON’TS

The first step is to choose a bank smartly. Don’t pick a bank located far away from where you live, for the inconvenience of driving that far on weekend will definitely put you off sooner or later. There has to be a trusted bank in your neighborhood, pick that one.

Then decide how much you want to set aside for your child each month, perhaps, based on how much you would need to invest in his education. Don’t stretch yourself; the monthly allocation should fit happily in your budget. Most banks offer interesting schemes that range from a minimum monthly deposit to links to your account, even investment in equity and mutual funds, insurance protection and ATM/debit cards.

Remember you will need a minimum amount to open the account; it could range from MNT 15,500 – MNT 155,000. If you are opting for an ATM/debit card for your child, you will probably have to maintain a minimum balance as well. Check all this before signing on the dotted line.

Check These Facts:

• Can you link your child’s account with yours?
• Can the bank debit the monthly allocation directly from your account? Are there any minimum balances or charges involved for direct debit?
• Does the bank offer an ATM/debit card to minors? Is there a monthly withdrawal limit? Choose one with a low limit.
• If your child signing up for an ATM/debit card, will your bank provide SMS alert? This is important bcoz every time he transacts , you get a SMS alert.
• Will the bank send you monthly/quarterly/annual statements?
• Does the bank offer education/accident/insurance cover?
• Is there an option of investing in mutual funds or debt/equity funds?

WHY SAVE?

Think of the day when your child has turned 18 and gained admission into a prestigious institute and you find out that you have to shell out MNT 12,400,000 for his admission. If you start saving early, that amount will not daunt you. Saving not only prepares you for tomorrows, but also makes tomorrows a cakewalk. However, the biggest benefit of getting your child to save is to teach him the value of money and the art of saving. Explain the benefits to him. Sit with him and ask him how much of his pocket money he wants to set aside; tell him how money grows through earned interest. Depending on his spending habits, decide whether you want to give him an ATM/debit card; if you do, teach him how to use it sparingly. If he is old enough, explain to him the benefits of mutual funds. Who know you may have an entrepreneur in making?

If you begin early, your child will soon learn to be independent and appreciate the value of money. And like you, he will never land himself in a financial mess bcoz he would know how to handle money well. After all, money doesn’t really grow on trees!