Passing on the right advice to your kids

I’m not sure if it’s a throw back to a proper European upbringing or just new Australian etiquette but Australians are both afraid of openly discussing money and finances – but conversely happy to take advice on financial matters from who we in the industry refer to as “Bob, the neighbour over the fence”. Especially if this advice confirms our fears.

You know Bob. He knows everything. And he knows someone who’s friend knows someone who’s brother tried that and lost all their money, “wont work mate, I wouldn’t do it”. A very credible source.

For many of us our financial education is limited to overhearing snippets of our parents conversations at best, and yet our incomes are of course higher than ever. With so many 20-30 year olds earning around $100,000 per annum there’s a lot of opportunity to set themselves up very well if they know what to do with it.

But who are they to learn to if we’re not comfortable sharing our education and experience?

Financial literacy is best taught by parents (providing the parents themselves have a good handle on money) to children and it can start with encouraging savings from a very young age. From these savings, I believe, children should be encouraged to spend a little so they understand what spending their hard earned and saved money means as well. I’ve watched my children learn this and there’s nothing so illuminating for them as staring at a shelf of desirable things and realizing they have to hand over their cash to have them – and they cannot have all of them.

There are a lot of lessons to be learned from hearing about other people’s financial experiences, good and bad, so how do we go about it?

You could start by sharing your own experiences with your friends.

Educate yourself and share the learning.

Take some time to fully explore your own finances, complete a budget (no, that’s not cut out all luxuries but rather understand exactly what you spend).

Consider ways you can save money, on insurances, electricity, lunches, refinancing your home loan

And use your new savings to make your money work harder for you.

article in the Western Weekender

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