5 Pieces of Advice to Tell Your Child About Money is a series that will run every Tuesday for the next few weeks where some of the top personal finance bloggers share their thoughts on this topic. At the end of the series I will post my own 5 pieces of advice. The entire series can be found under Money Tips.
For those of you just tuning in, here is the background to this topic: One of the things that I am really passionate about is setting a good example for the next generation. It seems that so many kids these days have no idea about personal finance and have not been taught the skills on how to manage money for the future. Many of them don’t have to work hard for what they have and so they haven’t developed an appreciation and respect for money earned.
1. No one owes you a thing… Too many people go through their entire lives with the expectation they are owed something. This is not the case, or at least it shouldn’t be. All you should ever expect is to be judged, compensated and respected based on your work ethic and your ability to create, inspire and hustle.
2. Save for emergencies…big emergencies. When you are young and many years from considering retirement (and not earning much), it’s tough to save money. But I have discovered no softer pillow than having money in the bank for emergencies. Aim to save about a year of your basic living expenses in a simple savings account (no risky investments here). With a one-year cushion, you’ll be able to weather storms many others will not.
3. Live simply. In 2011, life seems pretty complicated. By the time you are adults, I imagine it will be even more so. There will be new gadgets and toys and cool services and “got to haves.” The problem is, all these things compete for your earnings. I’m not advocating living like a pauper, but limit yourself to only a few of life’s luxuries.
4. Learn to do things yourself, but don’t be afraid to call in the experts. You may remember the time your dad rescued a toy from the toilet trap, saving us an expensive plumbing repair bill. Or the time I climbed up in the attic to unclog the air conditioner drain. But your dad knows his limitations, and calls in the experts when necessary. That’s what emergency savings are for.
5. Don’t trade the things you care about for a big salary. Remember what mattered to you most when you were a kid: Family, fun, dreams. These things should remain important to you as a grown-up, but often adults sacrifice these things to earn a big salary. Now, everyone has to sacrifice some to earn a living, but by learning to be content, you may be able to earn a comfortable living while still enjoying other things.
Thank you Jason for participating and for your words or wisdom!
If you would like to hear more about what Jason thinks about this topic, please read his article entitled “10 Things I Want My Kids to Learn About Money”.
Stay tuned next week where we will hear from Tim at Canadian Dream: Free at 45 and what he has to say about this.