What fatherhood taught me about money

Becoming a parent transforms a person in a profound way. Becoming a dad brought to light my own relationship with money, informed by my childhood, and how it will shape what I want my kids to go through and what mistakes I want them to avoid. More importantly, it gave me a clear reason to go beyond saving to invest. Considering the high cost of education and how it historically rose before inflation, it was important to earn returns above inflation to be able to cover tuition costs in the long run. Now, as my son nears the middle of his first year as a student, I reflect on the money lessons that being a father has taught me.

Lesson # 1: There is no better legacy than education

I have no hesitation in admitting that I spend a disproportionate amount of my income investing in the education of my children, through mutual funds. It is because I teach my children that their heritage is their education, which my parents also taught me.

Many people want their children to have something better than what they had, which is why they believe that it is essential to be able to give their children a good education. While this is true for me, I also believe that education is the key to financial independence, which brings me to lesson no. 2.

Lesson 2: Make Financial Independence a Conversation at the Table

My mother, one of twelve children, took control of our family’s finances, which went against the gender norms expected at the time. As she was an accountant in my father’s shop, I saw how diligent she was in recording every penny she saved and spent after learning to read and write herself, which formed the basis of her financial trick. She was also entrepreneurial and sold clothes locally. I saw how stimulating it was and it taught me a lot.

This, coupled with my mother’s behavior towards money, showed me how important it is to raise my sons and daughters to be confident when handling money. , as well as being financially independent. It is important that they see themselves as the key to their financial success.

Opening an investment account for your child will not only start a conversation about investing, but will also show them the value of investing in the long term. A tax-free investment account in your name is a great way to do this.

I encourage open conversations. No subject of money is ever taboo in our home. I also encourage my children to have “secondary crushes” so as not to rely on “mom and dad’s bank”.

Lesson 3: Look for positive financial role models for your children

Growing up in a large family in India, my great-grandfather could only afford one of my uncles to receive formal tertiary education at a reputable, albeit expensive, medical school abroad. Everyone in the family had to contribute financially to his education. He would come home every semester and tell us about his experience. He also checked with us when we were kids to make sure we went to school. It was the genesis for me to be diligent in school so that I qualify for a formal education.

It was an important lesson and it reminds me that children look for people who embody the things they consider successful and important and often mimic their behavior. The power of shaping good financial habits for your children cannot be underestimated.

Lesson # 3: Start investing early, but sweeten it up with small rewards along the way

There are two distinct memories I have that inform my financial behavior – even today.

First of all, every Monday I went to the Postal Bank to save R5 on a savings account. I would get a stamp in my savings book from the cashier as proof of my savings. It started a habit of diligent saving from an early age.

Second, I was going to school by train. One Thursday, I stopped at Salt River Junction in Cape Town to buy a raspberry snowball and a 200ml bottle of Coke; it was a small gift of my pocket money that I spent just a week after saving money at the post office bank.

Using investment accounts that I opened for my kids, paired with occasional treats, I do something similar to show them that investing doesn’t have to be a burden and that it is important to have a balanced view of investment and spending.

Lesson 4: It’s okay to stumble, but learn from your mistakes

I also learned from my parents’ financial mistakes. My dad wasn’t very good at money and took the wrong kind of risks. This behavior led him to be kidnapped when I was younger –

a painful memory, which still lives in me and which shapes my own attitude towards risk and many problems in life. It was a hard lesson in financial resilience and the consequences of financial irresponsibility. From this destruction, I learned not to overspend, to be as conservative as possible, and to take the right risks.

I have also learned financial discipline and courage and that it is okay to stumble. Financial setbacks are common, and there is no shame in making mistakes; what is important is how you get up and get back on track.

It also means having difficult, honest conversations with family and having to give up luxuries when things aren’t going so well.

Remove barriers this month of savings

Talking about money was once considered a taboo; but it’s up to us as parents to get our kids comfortable with the conversation, invite them to ask questions, and put them on the path to financial well-being.

PERSONAL FINANCES


Source link

About Mitchel McMillan

Check Also

The Vineyard Gazette – Martha’s Vineyard News

The Cape and Isles Attorney’s Office announced this week that it would not sue the …