From an early age we learn about money but, not the value it can represent. Most of us earned “pocket money” one way or another, some ways less pleasant than others. Usually with resistance we approached the task and it was well worth it after some shiny new coins made their way into our hands. I’m sure we all remember the moment of excitement when it was time to put these beauties to work at the local shop. For me it was all about lollies and arcade games (Street Fighter was the rage then – for some of you it might have been 1980 Galactica!). Two hours of hard work for 30 minutes of sugar fuelled fun followed by a major sugar crash. After that, we would return home to the security of our parents and all the creature comforts we had come to take for granted.
In this experience an important lesson was unnoticed, a lesson that would be vital later in life as self-sustaining adults. This was the lesson of financial control and the time value of money. Sure, being a kid should be about fun but, a little tuition and some gain of knowledge back then could have set the foundation for sound financial thinking in the future and help so many adults avoid the financial pitfalls that are so prevalent in society today.
Not to lay blame but, unless your parents were trained in money management or were inquisitive and progressive in this area chances are you were never gifted with the necessary skill set to manage your own finances. As for academia stepping in, it’s obvious they drop the ball when is comes to financial management in the early teaching years. Instead of learning about cashflows and budgeting, the time value of money and different investment vehicles, we are taught about impractical mathematical concepts like algebra and vectors which are great if you are an engineer or pilot but, not very useful when balancing your bank account. Then, there were hours upon hours dedicated to home economics and geography. Home economics? Who doesn’t love a good muffin recipe or knowledge of where I can find Taumatawhakatangihangak oauauotamateaturipukaka pikimaungahoronukupokaiwhe nua kitanatahu (no this is not a typo, it’s an actual mountain in New Zealand) but, there is much greater value in knowing how I can budget my finances so that I can afford to go on holidays when I want or have sufficient funds to cover my bills or even bigger picture how I can turn $10,000 into $1,173,908 by doing absolutely NOTHING when I park the funds into a low cost index fund over a normal investment lifetime.
Fast track to today and information is everywhere. Thanks to the likes of the Internet, access to financial resources has never been so readily available. For the astute individual financial knowledge and the benefits are all within easy reach. No longer is there an excuse for ignorance, now the greatest opposition to financial freedom is YOU. Your mindset and your interest are all that is required to bridge that previous gap and take back control of your financial life. Be curious and learn!
As a adult and a parent of two it’s evident the responsibility to share this knowledge with my boys falls on me and I plan on providing the best guidance I know how. Next time you hand over some change to your child for washing your car, give some thought about the greater lesson that can be learned and help them secure the future you should have had by now.