Teach them to start small: This is again dependent on how much the friend or family member is willing to open up. Nevertheless, one can emphasise that it is always better to start small, rather than not start at all. Financial planning is a long term strategy and should be continued consistently. So it is always better to take one step at a time. Ask them to look at their expense patterns, draw up budgets and have the essential risk cover in place. Then, one can help them identify their important goals and start saving on a monthly basis to achieve the corpus for such goals.
Share relevant resources: If one is out there helping someone to get financially better, then it is obvious that his knowledge in such matters is at a better footing. So it pays to share any information and awareness one has. If a particular mutual fund scheme is not good or if one has read that an insurance plan is good, then it is important to discuss such ideas with the other person. Similarly, one can share information about relevant resources like good personal finance magazines, personal finance websites, movies like The One Idiot and education initiatives like the Franklin Templeton Academy.
Share experiences: Another way to help others in becoming financially fit is to share one’s personal experience on such matters. Although many people may not be willing to share personal experiences, one can discuss non confidential information.
Help in building connections: Having the right professional help is vital when one sets out to become financially fit. If one is already healthy financially, it is natural that he is able to guide his friend or family member to become the same by connecting them to the right financial advisor or planner.
Help in attending personal finance seminars: When professionals share knowledge and experiences, the learning is faster. This is why it is recommended that one attends personal finance seminars. When one is helping friends and family members to become financially fit, it is useful to give information about such personal finance seminars which may be conducted in the city. For example, Money Life conducts many free seminars on various personal finance topics in Mumbai.
Explain terminologies, especially to the younger generation: If one is guiding a friend or family member who is completely new to this line or who is of the younger generation, it helps to describe terminologies and give a basic understanding. For example, one can give the younger generation a Systematic Investment Plan form and encourage them to ask relevant questions if they cannot understand the same.
Discuss accountability: Sticking to a plan after starting out is very difficult. Especially, if there is no one to report to. One can ask the friend or family member to select a trusted person for this purpose when they set out to become financially fit. If they are willing, one can assume this responsibility, since the understanding is much better. Lack of accountability can result in slippages.
Motivate them to set rewards: The carrot sometimes works better than the stick. Ask the friend or family member to reward themselves once in a while if they move one step towards financial fitness. For example, if they want to control credit card spending, keep a target below which the expenses should be incurred on the card. If this target is achieved, there can be a small reward. However, make sure that the reward does not end up being more expensive than the expenses itself!
This article was originally published on Moneycontrol
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