2023-06-27 12:30:00
If children do not accept the correct concept of financial management since childhood, they are likely to make serious financial mistakes when they grow up. Now in his 70s, Michael Yardney, an investment consultant and best-selling author of financial books, said that today, his children have children of their own, and what he regrets the most is that he did not teach his children about personal financial management as soon as possible. Start teaching them in kindergarten.
Michael Yardney is the founder of Metropole, a senior real estate investor and consulting firm in Australia.
He said that if time could be turned back, he would teach his children the following six personal finance concepts:
1. To buy what you want, you have to wait
He said that if children want to get something they want, they need to save money by themselves, and wait until they have saved enough money before buying the thing they want.
In reality, the biggest problem is that parents always want to give the best to their children, and are afraid that children will be missing in the process of growing up. Do you have a trampoline in your backyard? Buying new clothes for your little ones every season? Do children have new toys every week? If you have all of the above behaviors, over time, your child will become impatient and always expect to get what he wants immediately, thus developing bad habits.
Patience is very important. Instead of buying the same 20 yuan toy for the child immediately, it is better to give the child 5 yuan for savings every week, and wait until the money is saved before buying, so that the child can feel the process of saving money. After they have gone through the process of saving money and waiting, they will cherish the hard-won toys even more.
2. The one who has the most “toys” is not the winner in life
Yardney says we all like to own things, but that desire can get in the way of financial management. We often see a lot of people living a luxurious life on social media. Their glorified life is enviable, making everyone feel that they have to work hard and have more in this world.
But “having more” does not make us truly rich. Instead, it is those things that cannot be bought with money that make a rich life, such as one’s experiences and the people you meet in your life. Yardney believes that true wealth is what is left when all possessions are lost.
3. The sooner you save, the faster you can enjoy compound interest
Using compound interest to increase wealth is not only dependent on money, it is also dependent on time. In fact, given enough time, the money saved will accrue more interest. Children are more likely to secure their financial future if they are encouraged to save and invest early.
4. Pay more attention to passive income
Not all income is created equal, and there are active and passive types. Active income refers to the income obtained at work. The income is obtained according to the corresponding working hours. If you do not go to work, you cannot receive salary. Passive income means that you only work once, and then even if you don’t work anymore, you can continue to earn income from this job. Passive income is the way to get rich.
For example, this is what real estate investors do. At first they work hard, save money, and then invest after a certain amount of money has been accumulated. Now, their money starts working for them and “passively” consistently provides them with a good return on investment in the form of capital growth and rental returns.
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5. Debt Today Equals Pain Tomorrow
When you’re young, it’s always more important to enjoy the moment, not tomorrow or ten years from now. This notion is also the reason why many people have large credit card debts or lack of retirement savings.
Teach your kids early on that debt today can rob you of tomorrow’s income, and that limiting debt at a young age means more control over your personal finances later.
6. Luck is earned through hard work
We often attribute other people’s success to “good luck.” Maybe those successful people did the right thing at the right time, or met the right people, and got on the road to success. But truly successful people work hard to reach the pinnacle of their chosen field or endeavor.
If kids can find something they love and work towards it, they will be more likely to achieve great things in the future, including financial freedom.
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