Money is a powerful tool that can either build or break our dreams. Yet talking about money can still be considered an uncomfortable topic; a discussion that’s deemed inappropriate for polite conversation. That often means money management isn’t taught by parents to their children.
I’ve been reflecting on my early 20s and the financial decisions I made. There’s so much that I wish I knew sooner: those crucial yet simple lessons that lay the foundation you need to navigate the world of finance. Let me share some of those invaluable lessons about money that I wish I had learned earlier.
1. The Magic of Saving
The simple act of saving teaches us discipline, delayed gratification and how to set goals, and a piggy bank is an easy and fun great way to teach children this.. Saving from a young age helps us cultivate the habit of setting aside money for the things we truly want, while also building a safety net for unexpected expenses. It's a lesson that can shape our financial future and give us peace of mind.
2. The Difference Between Needs and Wants
In today's consumer-driven society, it's easy to blur the lines between our needs and wants. Understanding this distinction is a vital lesson that can save us from falling into the trap of impulse buying and accumulating unnecessary debt. Cash-smart kids know they have to take care of their needs, and save for the future, before they start thinking about what else they want. By helping your child see the difference early on, you empower them to make informed financial decisions as they grow older and become financially independent.
3. Budgeting is the Roadmap to Financial Freedom
Budgeting is like having a roadmap for your financial journey. It teaches you to prioritise and allocate your money effectively, ensuring you have enough for your needs, wants, and savings. Introduce children to the concept of budgeting by giving them an allowance. Encourage them to allocate their money wisely, setting aside a portion for savings and expenses like their LEGO toys and favourite bottle of Prime. This invaluable skill will help them stay in control of their finances and avoid the pitfalls of overspending.
4. The Reality of Debt
Debt can be a double-edged sword. While it can provide opportunities for growth, bad debt can lead to a lifetime of financial anxiety and stress. Teaching young people about the consequences of debt, the importance of paying bills on time and the dangers of high-interest credit cards will arm them with the knowledge they need to make responsible financial choices.
Embrace the Chat
Money may be a taboo topic for many, but by having an open and personable approach to teaching financial literacy, we can arm future generations with essential skills that will positively impact their lives. Let's break the cycle of financial illiteracy and foster a generation that is knowledgeable, confident and in control of their financial future. The lessons we teach today will create a brighter and more financially secure tomorrow for all.
