If your parents are like mine, they taught you many things over the years. From how to tie your shoe laces to how to drive a car and more, your parents taught you almost everything you need to know to function as an adult. However, if your parents are also like mine, they left out one very important chapter about life and succeeding as an adult. Money management is discussed in some homes, but in most homes, the topic of money and family finances does not extend beyond whether the parents can afford to purchase an item kids want to buy and how much the child’s allowance is set at. As an adult now, there are a few important lessons I wish my parents had taught me about money.
The Basics of Budgeting
Once I moved out of my parents’ house and began living on my own, I struggled considerably with budgeting. I knew that I had to pay certain bills with my paychecks each month, but I always seemed to run out of money before the end of the month. Furthermore, I never had money for emergency situations, and this was one of the factors that led to me accruing credit card debt. If my parents had taught me the basics of budgeting, such as budgeting for non-recurring expenses and the inevitable rainy day, it would have saved me a considerable amount of stress and would have helped me to avoid my struggles with credit card debt.
Start Saving Early
Now that I have started actively saving for retirement, I have realized that I would be much farther along in my quest to meet my retirement goals if I had been saving throughout the years on a regular basis. Like many adults today, I saved very little in my earlier adult years, and the amount I save regularly has increased. However, if I had started saving earlier, I would have benefited from factors like compounded interest, accrual of reinvested dividends and more. If my parents had taught me to save and invest a small portion of each of my paychecks from the time I received my first paycheck, my financial situation likely would be considerably different than it is today.
If You Spend It, It’s Not Yours
I also wish my parents had taught me the very simple lesson of if you spend your money, it is no longer yours. Many people today believe that they are well off because they are in a certain income bracket, but they find themselves struggling to make ends meet at the end of the month. When you look at their income level, you believe that they should be well off, but they spend almost every dollar they earn. Essentially, they are cash poor. I struggled with this myself over the years, and I know I would avoided considerable financial hardship in my life if my parents had told me that I would never become well off or financially stable if I spent all of my money.
Money Really Can Grow
If you are like me, you grew up hearing the phrase, “Money doesn’t grow on trees.” This cliché stuck in the back of my head for years, and it did not really sink in that money actually could grow over time until I was well into my adult years. Money certainly does not grow on trees, but if you have a little money to invest, it can grow through interest, dividends and more over time.
Invest In Assets, Not Junk
Now that I am older in age, I realize that there are many things I can spend my money purchasing. I am now wise enough to differentiate between appreciating assets and depreciating assets, and my goal is to spend the majority of my money on appreciating assets. In my younger years, however, I wasted a lot of money on assets that depreciated over time, such as furniture, electronics, cars and other similar items. The value of these assets will almost always decrease, and I lost money just by purchasing them. Now, however, I invest the majority of my money in appreciating assets like stock investments and real estate. While you can lose money with all investments, I wish my parents had taught me the difference between investing in appreciating assets versus depreciating junk.
Money was a taboo topic in many homes when I was growing up, and it unfortunately continues to be a topic that is commonly not brought up between kids and parents. However, obtaining a sound financial education about budgeting, saving, spending and investing is imperative for kids today. This is not a subject that is covered in most schools, so it is up to parents to take the initiative and educate their kids properly about money management and saving.