You are 48 years of age with 2 grown up children, and you have a huge demand on your money for vacations and for buying gadgets. How do you handle this? You could either do it ad hoc or create a system.

Look at what a friend has done. Nice, brilliant system, and I like it. He has 2 SIPs running in 2 balanced funds for Rs. 10,000 a month. He manages the fund and the withdrawal is democratic. The rules are simple – the last 12 months contribution cannot be withdrawn i.e. there should be no withdrawal load or any capital gains tax. Each of the family member gets a turn, but his wife can over rule if there is a family need. So if an a/c or a refrigerator has to be replaced, that gets top priority. She will decide on all the household stuff including the family laptop. The kids do not have their own laptops, and will get one only after they go to college. The mother can decide to hand down the family laptop to the kid, and that cannot be argued about.

Each person takes a turn in asking for the item they want. However the price bands will be decided by the wife (mother) and she has a damn decent knowledge of pricing of most the stuff that both the girls need. If one girl wants any item she has to ensure that there is enough money to buy one for her sister ALSO. Similar price of similar stuff. So one daughter can buy an Ipod for Rs. 5k and the other daughter can buy a cell phone. If she does not buy, HE earmarks the number of units for the other daughter..so if the market goes up and the other daughter can withdraw say 6k, great luck. Of course if it goes down she is in trouble.

It teaches the girls the value of waiting. They can pitch in with their own savings from their pocket money, but that is not really substantial. They know how to scout the shopping sites, ask friends, etc. and do comparative shopping. They even asked their dad whether it is not better to put into a pure equity fund and play the same game (the jury is still out on this). The kids are taught that instant gratification does not work. Simply does not work.

There is one hitch the girls have a rich grandfather – on the father’s side and mother’s side. So for their birthdays and for Diwali they are indulged. They can literally ask for the moon, with a sure chance that they will get it. So these kids do not bother asking their parents for dresses. Grandfather is a reader so books are a constant flow – and a Kindle too!! So anything educational, or anything that the kids want and the parents will not disapprove is on tap. So a new kindle can come from grand dad but a smart phone cannot (a phone has to be 30 months old before upgrades).

Ditto for vacations. Do not take an Indian vacation for 2 years and go on a foreign vacation. However dad’s rule is one vacation in 18 months is COMPULSORY.

So a nice house with corporate rules and regulations, with parental supervision. Only issue is Grandfather over ride.