It is not too late to teach an old dog new financial tricks!
It is true, most of our money habits have been learned from our elders - those who came before us and were the breadwinners at home. If you grew up in a home where drawing up a budget and planning for any expenditure was a norm, then you would have also been likely to have also inherited this habit and would also be able teach it to the next generation. Ideally, this would be in a perfect world. Many of us may have inherited a bad relationship with money/finances where we are in debt, living above our means, competing with the Molefe’s even when we didn’t have the same income as they did and being financially overburdened and depressed.
What are the money traditions that we learned from our elders?
you will take 40 days and 40 nights to arrive at your destination that you should have arrived at in 4 days. Your budget helps you to plan, it helps you to recover.
We clearly have a lot to still learn and for the next generation to not only be technologically savvy, but also financially savvy.
For some of us the only lesson we learned about money was that our parents did not have any money. Each time you would ask them for something that required them to take money out, they would respond with “We don’t have the money”. To compensate for all those disappointments that came with not having money, we now overspend and end up spending recklessly and land in even bigger financial problems. Sadly, this perpetuates the cycle of bad money habits.
Finance was never a topic that was discussed at family meetings. For some who were fortunate and grew up well off, your parents may have not taught you how to budget because they felt that they were providing therefore there was no need for you to worry about money because they ‘had it covered’. Money was never and is still not an easy dinner table topic. Whether with friends, family, or colleagues, we never want to discuss money, especially when we are in trouble financially. The hard truth about money is that we only care about it when we want to use it for that moment. We never want to plan or face the harsh reality of mistreating it.
So how do we start creating new traditions when it comes to our finances that can be carried on to the next generation?
1. Communication – we need to start talking about money at home. Teach children how to save and how to positively use credit in a practical and age-appropriate way.
Example: when giving your children an allowance, teach them that for every month that they save some or all their money, you will give them 10% of that money back at the end of the year. Similarly, if you borrow their money, you will then pay it back with an interest of 5%. That way you teach them about credit too. Teach them that if you do not pay back that money at the time you promised to pay it back then they can write it down in a file to track your payments that you are a late payer. They can use that information in your file to decide whether they will lend money to you again should you come back and borrow from them. Already you have taught your child about the relationship between a consumer and a credit provider and have added a lesson about the credit bureaux keeping consumers credit profiles.
2. Planning – whether it is planning for a holiday or for home renovations, you need to have a plan. As consumers we should have a vision for our money; where it is that we want our money to go or what do we want to achieve with our money? Have a timeframe of when you would like to achieve these plans. Your plan could be about how long you will take to pay off your debts. The power is in sticking to your plan. You take that same strategy and teach it to your children.
3. Dealing with bad spending habits - If you have certain triggers that push you to spend money that you did not plan on spending, then you need to be practical about dealing with those triggers. Write them down and find alternative ways to avoid spending.
4. Budget – this is a big one. We can plan and have the greatest visions, but if we do not do our monthly or even weekly budget, we will go off track as we will not be aware of our income vs expenditure.
5. Leave your children with assets and not debt – building wealth for our children should be the ultimate goal. We do not want to leave this world having debt and in the unfortunate event where we may have not had credit life insurance, we leave heap amounts of debt to our children, and they get left behind with these burdens. We grew up hating debt because we saw how our parents suffered because of it. Credit is a tool and therefore should be used with caution which is brought on by knowledge.
6. Your retirement, your responsibility – our children should not be our retirement plan. Speak to a financial advisor who will assist you to have secure plan for your retirement so that you may maintain your current lifestyle or have a better one.
These are the life skills we want our children to learn. Finances should not be a taboo subject. So, this Heritage month as we celebrate our beautiful different cultures and diversity that have made us into this wonderful, cultured country that we are, let us also not neglect how far we have come and how much further we can go when we create new traditions of being financially free.