10May/13

# Make your children financial savvy-Part II

###### Q2.What is a recurring deposit ? I am 12 years old . I want to start a recurring deposit of Rs.1000 in a bank.The interest rate is 8% per annum compounded quarterly. How much will I get after 5 years?

Recurring Deposits are a special kind of Term Deposits offered by banks which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account. It is similar to making FDs of a certain amount in monthly installments.

###### Formula:

Maturity Value = P*((1+R)^N-1)/(1-(1+R)^(-1/3) )

Amount invested each month, P = Rs. 1000

Rate of interest ,R = 8%

Compounded Quarterly ,therefore rate of interest would be
R = 8% ÷4 = 8/400 = 0.02

Number of quarters over the duration of 5 years,
N = (5 X 12 months) ÷ 3 = 20 quarters.
So,
Maturity Value=1000 * ((1 + 0.02 )^20 -1) / (1- (1 + 0.02)^(-1/3))

For Ms Excel type = 1000 * ((1+ 0.02)^20-1)/(1-(1+0.02)^(-1/3))

When you press the enter key you will get
Maturity value= Rs. 73861.87

###### Q3.What is inflation? My family’s expense is Rs.10,000 or \$10,000 per month. At the inflation rate of 2% , how much will be the purchasing power of this amount after 10 years?

Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. With the rise in inflation , every dollar or rupee you own will buy a smaller percentage of goods or services.

The value of a rupee or dollar does not stay constant when there is inflation. The value of a rupee or dollar is observed in terms of purchasing power, which is the tangible goods that money can buy. The purchasing power of money goes down with increase in inflation.

For example, if the inflation rate is 3% annually, then theoretically a \$1 or Re.1 chocolate will cost \$1.03 or Re.1.03 in a year. After inflation, your rupee or dollar can’t buy the same goods it could beforehand.

###### Formula: Reduced Amount = Present Amount / (1+ inflation rate) ^ Number of years

= 10000/(1+2%) ^ 10
= Rs 8203 or \$8203

03May/13

# Make your children financial savvy – Part I

We should make our children learn to handle finances early in life. Open a personal account for them in a bank and encourage them to make regular savings from their pocket money etc. Putting the habit of saving money is very important, it will help them when they grow up as adults. Growing up as spendthrifts hits them in later stages of life.

Teach them all banking operations such as making demand drafts , putting their money in fixed deposits , handling recurring deposit accounts etc.

Let them fill the forms for making demand drafts for education fees etc.

Let them fill in deposit slips and withdrawal slips of their bank accounts.

Teach them everything about managing, investing and saving money.

###### How to use these formulas?

The calculations can be done manually or on MS excel worksheet using ‘=’ sign before the calculations.

###### Formula:

When money is put in a fixed deposit for a certain period, the final amount needs to be calculated using compound interest formula. The interest earned is a fixed percentage per annum but banks usually compound it every quarter. You get more from quarterly compounding than from annual compounding.

###### Note:

You need to check the terms and conditions with your bank to find out what kind of compounding is done i.e. whether annual compounding or quarterly compounding.

Maturity Value = P * (1+ R% ) ^ N

In the above case ,
Amount Invested i.e. Principal amount ,P = Rs.50,000
Rate of interest per annum ,R = 9%
Time duration in years , N = 5 years.

###### Case 1

: For annual compounding :
Maturity value = P * (1+ R% ) ^ N
= 50000 * (1 + 9% ) ^ 5
= 76931.19775

###### Case2

: For quarterly compounding :
The above formula is modified to:
Maturity Amount = P * (1 + R% /4) ^ (4 * N)
= 50000 * (1 + 9/400) ^ (4*5)
= Rs 78025.46

To calculate using Ms Excel use the formula as =50000*(1+9%/4) ^ (4*5) and press enter key once you have entered the formula.(don’t forget to put ‘=’ sign in front of the formula)

###### Note:

‘ * ‘ Operation stands for multiplication
‘ ^ ‘ Operation stands for ‘raise to the power’

18Mar/13

# Teach your children Responsibility -Part3

###### Responsibility towards home and parents:

It is usually seen in most of the homes that children are busy watching television or playing while parents are doing all the household work.

###### Myth 1:

Parents think that the children are too small to be involved in the household work .

###### Myth 2:

Children are already doing so much of work and are so much stressed and burdened by their study schedules so why burden them more???

But, the reality is that involving children in household tasks doesn’t take much of their precious time. On the other hand, they get a change from the monotonous life style and they feel more bonded and responsible towards home.

A small sample to show the Activities and Ways to teach them resposibility

• They can be made responsible for laying down table during meals and clearing the area after meals.
• They can take up the responsibility of cutting salads and veggies.
• If your child, while sitting and happily watching television, calls you to give him a glass of water or an apple, encourage him to help himself fetch the water or wash and peel the apple for himself.
• While gardening give him some responsibility such as sowing new seeds or pruning of plants etc.
• When the child comes back from school, college etc. encourage him to keep all his belongings in proper place.
• Once a week encourage him to clean his cupboards and storage areas .He should be encouraged to keep his play area, study area and room clean.
• When someone at home is unwell or is taking rest, he should be taught to show a responsible behaviour .

05Mar/13

# Teach your children responsibility-Part 2

Teaching Children Interpersonal Responsibility:
Teaching interpersonal responsibility means that children should be taught to take up responsibility of their behaviour while dealing with others.

Children should be taught compassion i.e. how other person feels .They should be taught to respect other person’s feelings.

Example situation 1:
Mother: Disha(sister) lost in the tournament. Do you remember when you lost in running race ?
Brother: Yes, I remember I was very sad and down.
Mother: So, what will you do?
Brother: I will give her a big hug and take her out to play.

Example situation 2 :
Brother: Mummy why is Disha so happy today? (Brother asking about his sister)
Mother: Disha won the tournament. Do you remember when you won running race ?
Brother: Yes, I remember I was very happy and escalated. I wanted to share my happiness with someone.
Mother: So, what you will do?
Brother: I will give her a big hug and celebrate her joy with her.

Teach children to be sensitive to others feelings. Teach them to share the joyous as well as sad moments of others.

Children should be taught to work responsibly in a group.
You can make a group of children.Give them some theme to work on , it could be maintenance of the garden, maintenance of cleanliness of the building or the area, or creating awareness in your area about some issues etc . Give each child a responsibility .Maintain a chart of responsibility for each child. At the end of activity put remarks or smiling or sad faces depending upon how the child discharged his part of responsibility in the group activity.

• Let the child maintain his personal dairy in which he can maintain a record of how he behaved with his peers and how he tackled problematic situations. At the end of each week you can go through the dairy and make relevant remarks or suggestions.

Children learn by observing . We being adults should demonstrate a responsible behaviour while dealing with others. We should be honest in our dealings, should be compassionate towards others.

Example situation 1:
Child : Daddy why are you going to throw that cover in the dustbin .You can throw it here, on the side of the road.
Father: Dear child, we should never litter on roads.

Example Situation 2:
Child: Why did you return money to the hawker?
Father: Dear child, hawker by mistake returned me extra money. I returned him back the extra money he had paid.

Children should be taught to deal with other people with respect. They should not discriminate others on the basis of caste, creed or class.

• While attending some class or an activity in a group, if your children are better than others or able to finish the work earlier, they should be taught not to create disturbance or distract others. Children should be taught to act responsibly when attending some class or group activity.

Children should be taught self control when dealing with others. Self control means showing responsible behaviour towards others.

Children should be taught to be honest and not mislead others by telling lies or manipulating the truth. This is very important for creating an environment based on trust.

26Feb/13

# Teach your children responsibility – Part 1

As parents we should strive at teaching responsibility to our children very early in life. We should help them to grow up as responsible adults. There are different levels of responsibility-
• responsibility at personal level(personal responsibility)

• responsibility in dealing with others(interpersonal responsibility)

• responsibility towards home and parents

• responsibility towards society and country

Personal responsibility:
Children should be taught to take up personal responsibility.

• Let them make choices and teach them to live by their choices. Initially, they may be guided on how to make choices and slowly they should be left on their own. Choices given should be limited. Start by giving them little choices such as the choice to select menus on family outings, let them select what clothes they want to wear when going out on an occasion etc.

• They should be taught to own up the responsibility of their actions. They should never be encouraged to make others as scapegoats for the results of their actions or choices.

• They should be taught to take up the responsibility of their health and well being .

• They should be taught to take up the responsibility of doing their homeworks in time. Initially parents can be around guiding them to do their homeworks in time but slowly the responsibility of doing their homeworks should be shifted to children.

• They should be taught to take up responsibility for their exams preparation and take up the responsibility of their results henceforth.

• They should be taught to take up the responsibility of keeping their work area clean.

Tools that can be used as measures of responsibility quotient of children:

• Charts can be maintained. These charts should be pasted in the visible areas where children can see them now and then but should be kept out of sight of outside people.

• Table of their responsibility areas should be maintained and should be regularly updated with appropriate remarks after keen observation. At the end of one week or one month their responsibility quotient should be evaluated and they should be made aware of it.

Results of not accepting personal responsibility:
Children who are not taught to take up their personal responsibility
• don’t succeed much in life
• are highly dependent on others for their views
• grow up as emotionally weak personalities

Thought process of children who are not taught to take up their personal responsibility
• Life is unfair
• Someone else is responsible for their actions
• They always look for the reasons for their failures outside and never have the courage to look inside
• Always looking up for someone to help them out

Some Famous quotes on Responsibility

In the long run we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are our own responsibility.
Eleanore Roosevelt

If you take responsibility of yourself you will develop hunger to accomplish your dreams.
Les Brown

A hero is someone who understands the responsibility that comes with his freedom.
Bob Dylan

The greatest day in your life and mine is when we take total responsibility for our attitudes. That’s the day we truly grow up.
John C .Maxwell

You must take personal responsibility.You can not change the circumstances,seasons or the wind, but you can change yourself.That is something you have charge of.
Jim Rohn

Accept the responsibility for your life.Know that it is you who will get you where you want to go,no one else.
Les Brown

11Feb/13

# TIME MANAGEMENT:

Does it appear to your child that he doesn’t have enough time in hand to complete his tasks, that he is always running late -then probably you should be looking into the way your child manages his time.
What is time management?

Time management is the ability to prioritise essential things and delegate lesser important things. Time management means effective use of available time. Time management is the art of handling and managing conflicting demands on your time with efficiency.

Why is time management important?
Time management is very important for students.
• Studies show that students who are able to manage their time well , are able to do well in their exams
• Their overall performance levels in all spheres rise as they feel more relaxed and stress free.
• Time management can be considered same as Self management.

Important steps for time management:

1. Tell your child to look into his daily routine:
• Ask your child to look into his daily routine and schedule from the time he gets up in the morning to the time he goes to bed.
• Tell him to write each and every activity of his including taking bath, sleeping, relaxing etc along with the time spent on each activity.
• Let him continue this observation activity for one week.
Purpose: This activity will give him insight into his daily routine and answer for himself where and how he spends his time. This introspection may help your child realise how much time he is wasting on daily basis and also find slots of time in his daily routine which can be put to better use .

2. Organisation and Prioritisation:
There are two verticals to organisation and prioritisation of activities:
1. According to importance of activities
2. According to time frame
According to Importance of activities:
Let your child answer as to what all things are important in his life:
Example list:
• Is social life important to him(spending time with friends, relatives etc)
• Is his academic life important to him(spending time on studies)
• Is time spent on extracurricular activities important to him
• Is the time spent on his hobbies important to him
• Is the time spent on television important to him
• Is time spent on internet, mobiles important to him

After going through all the activities that hold importance for him let him prioritise the list according to importance of each activity
Must do activities :Which are of utmost importance and without which he cannot do
Ok activities: Which are not so important and without which he can manage
No-No Activities: Wasteful activities that are consuming his time and without which he can easily manage .Such activities need to be delegated .
Purpose : Helps your child to delegate lesser important tasks and concentrate on more important tasks and activities.

According to time frame:
• Let your child divide all the tasks, assignments and targets into short term, medium term and long term according to time frame. For example he can place all the assignments such as project submission , practical exams etc due the coming week into short term goals.
• Time frame that needs to be considered short term, medium term and long term can be set according to individual preferences.
• Integrating and merging of short term goals into medium and then longer term goals is very important while making time tables and plans. Child should be able to map out and find how short goals will be leading to longer term goals and how do they fit into the plan of action for achieving longer term goals.
Purpose: This activity helps your child to prioritise tasks and activities according to time frame. Child can number the activities according to time frame into the activities that require to be done immediately, that for which he has little more time in hand and that for which there is much more time.

Tools that can be used for time management:
• To-Do list can help the child to manage his time. Best time to prepare a To-do list is before going to bed in the night. This helps him remember tasks scheduled for next day more vividly as they enter his subconscious mind while sleeping.
• Making use of calendars can help
• Setting reminders can also help

Things to be careful with:
1. If your child does not approach time management with a proper and right attitude it will lead to increased stress levels.
2. There may be many distractions outside that can keep children from managing their time. Child should be encouraged to say “NO” to things, people etc that prove distractions for him.