Recently, Promod Sharma asked me to share my story about important money lessons I have learned and what I think might be most important. I thought I would share some of my reflections in this article.
A historical perspective
When I grew up, my parents never taught me about money in a formal way. We never talked about money so for most of my childhood learning about money was mostly informal. For example, I remember growing up in a cash world and my dad telling me we never had money to buy the things I wanted. In those days, you had to save before you could even buy groceries because grocery stores did not take credit cards. I think my parents influenced some of my current beliefs like pay yourself first and the importance of living within your means.
My professional influence
When I graduated from University, I went straight into the financial industry I got a lot of formal training on the more technical elements of the personal finance industry like investing, taxes, retirement, insurance, estate planning, etc. In fact, after 23 years, I am still a student of the industry but I am very thankful for all the formal and informal learning as a result of being part of the financial industry.
Lessons for my kids
Today as I reflect about the all the things I learned and what is most important, I can’t help but come back to my current life as a father of 4 young boys and what I want them to know about money to help them get the right start in life and avoid the biggest mistakes I see happening with people.
Related article: Teaching financial responsibility to kids
Many books trying to teach kids about money focus on 4 basic things you can do with money: spend it, save it, share it, and invest it. I think the more important lesson is that you can’t do any of those things until you earn it first.
The most powerful thing we can teach the young is the importance of earning money. Money is an important tool in life and so many of our choices depend on our ability to earn it and how much we earn. Only when you work to earn money can you appreciate how hard it can be. Kids who are constantly given things have a tough time learning this important life lesson that hits you hard as an adult.
Earning more money can mean you have more choices but it does not guarantee you will make the right choices or prudent choices so you still need to understand the concepts of saving, spending, investing and sharing. If you want to spend more, save more, invest more or give more to others, you have to earn more. Unfortunately, with access to debt, people have forgotten about the importance of earning money.
My experience in the financial industry has taught me that one common trait of the wealthy is not just the ability to save more and accumulate more but there is also a strong tie to the ability to earn money. Earning more money could come from a solid education and working in a higher paying profession. It could also come from someone who is willing to sacrifice and work 2 or 3 jobs to get ahead financially. It might be those people that understand that earning more income can come from earning passive income in other ways. Or sometimes it’s just having the confidence or awareness for income earning opportunities.
Related article: Ways to increase your income
For me, knowing how to earn money is one of the most powerful lessons we need to understand and continues to be a focus as I teach my kids important financial lessons. What do you think? Do you have any other ideas for important lessons about money?