by Darren Smith
What are the lessons that we should be passing onto our children and loved ones?
Managing money has become more challenging in a world that is moving away from physical currency. We live in a world of swipe or tap and easy 24 hour access to money and credit. However, I am not sure that ‘easy’ is necessarily good when so many of our purchases can be influenced by emotion or lack of discipline and structure. Lesson one – the way we behave with our money will have a significant impact on our ability to keep it.
I still remember getting my first pay packet as an employee at the local hardware store. I placed a significant value on receiving my pay in an envelope with actual notes and coins. Each pay became a bit of a ritual where I could divide it up into various buckets and I would try and make it stretch that little bit further. Majority was used for fixed bills (mostly the car) and fun (usually sport or the beach) but I always had a small list of goals that I was saving for in the future. Whether this was the extra seat covers for my car, the annual holiday or the latest sporting equipment. I was also disciplined when it came to unexpected windfalls or in the case of my first job, the extra overtime I was sometimes offered. In my opinion, it is these windfalls that can greatly fast track goal attainment.
Having structure and accountability is so important – the discipline of breaking down the amount we receive into set buckets is critical (i.e. within our family we use the buckets of fixed, fun and future). For many who are struggling to make ends meet there is very little made available for the future bucket or the rainy day fund. When the ‘what if’s’ occur (and trust me, they will), it can have a negative impact and cause great stress for all involved.
We live an environment where we are encouraged to live beyond our current capacity – borrow for what we want now – you don’t have to wait. I still have ringing in my ears words of advice from my parents which was at the other end of the spectrum, 'don’t spend what you don’t have!' And it really is great advice...Technology has been a great enabler on so many fronts when it comes to using our money or accessing other peoples’ money. However, I think it has made some of those basic skills around money and goals even more critical for us to implement and pass on.
There are 8 principles that I would like to pass on and that I will look to expand on in future blogs:
- Understand what is your money and what is others
- Understand where your money is spent
- Set clear money goals
- Set a structured budget and stick to it
- Monitor and review it regularly
- Pick someone who can keep you accountable
- Have small celebrations along the way
- Make the most of windfalls
Knowledge of these basic principles can make such a huge difference and give confidence to the next generation.
I have 2 things I would ask you to do after reading this:
- Share this blog with someone you love or have a strong connection with.
- Share with me one of the key money lessons that you want to pass onto others.
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