Youngsters just don't seem to have enough to meet their wants. But a little bit of planning can help them maximise their purchasing power, says Preeti Kulkarni

There is no dearth of temptations to give in to for youngsters today. Add to this, the easy availability of credit - by way of add-on credit cards provided by their parents - makes resisting such temptations even more difficult. But being conservative while spending and shunning all comforts are practically impossible. Therefore, it is imperative to strike a balance between splurging beyond your means and being miserly while spending on basic necessities. Here are some money management tips to help you lay the foundation for a financially secure future.

DEVISING A BUDGET

"Often, youngsters complain that no matter how hard they try, the allowance they get from their parents always proves inadequate at the end of the month," points out certified financial planner Prerana Salaskar-Apte, partner of financial planning firm The Tipping Point. "To avoid such a scenario, it is advisable to start planning your expenses at the beginning of the month and not when you are half-way through spending your allowance." Instead of playing catch-up at the end of the month, you could earmark the money you receive for various activities you are likely to undertake in the course of the month. Here, parents could chip in and help set goals for the month and work towards achieving them.

CONTROLLING YOUR SPENDING

Drawing up a budget is just the first step. To ensure that you do not overshoot the budget, it's important to closely monitor your spending. Many a time, the culprit when it comes to going overboard with spending is credit cards. Perhaps, on parents' part, it would be wise to steer clear of doling out add-on cards to the children and stick to debit cards or pre-paid and cash cards instead. As opposed to credit cards, debit cards - which are linked to bank accounts - could inculcate the saving habit.

PRIORITISE YOUR GOALS

Peer pressure could give rise to the desire to own every item others in the friends circle flaunt. The limited budget will ensure that one is forced to rate his or her wants in the order of preference and let go of the less important ones. "For instance, a youngster we were counselling wanted to buy a bike and at the same time, wanted to join a gymnasium as well, but couldn't fit both into his budget," says Ms Salaskar-Apte. "We advised him to walk up the distance between his house and his college every day instead of buying the bike. The thought appealed to him, as he was a fitness freak." If you are planning to take up higher studies, you could look at saving and investing money for the purpose instead of succumbing to short-term desires.

MAKING INVESTMENTS

While savings at the end of the month from the allowance received from parents is bound to be minuscule, you could still look at investing small amounts in mutual funds through the SIP route. The minimum investment amount specified under some schemes is Rs 50-100 per month - the ideal launching pad for inculcating the investing habit. It will also give you a glimpse into the power of compounding - even a small sum, when invested for a long period of time, could grow to a significant amount. "This will ensure some exposure to market instruments and they will be able to see their money grow in the long term," explains Anil Rego, CEO of financial planning firm Right Horizons. Even if you are not able to save anything of note from your pocket money, you could try to involve yourself in your household finances and learn financial discipline. "On their part, parents can assign certain tasks - like maintaining household accounts - to kids in their early teens, or even involve them while making investment decisions," he adds.

Source : http://epaper.timesofindia.com/