Financially Wise Children
An Encouragement Guide
In one of my radio interviews, I encouraged women to look after their financial future. I suggested parents encourage their girls to learn maths at school as a foundation for their financial education.
A single mother has a daughter of 15 years, a son 13 years. She is employed with a modest salary. She asks advice on how to best to encourage her children to be financially wise.
A great question!
The first step is to have a family meeting. Draw up a pie chart with Mum and the two children suggesting where the family income should be spent.
A pie chart is a special graph divided into wedges each representing a part of the whole. The whole pie represents all the money available to meet the family needs.
For example, if rent is 50%, cut the pie in half with the other half sliced up in smaller portions to cover all the other costs.
Each family member writes a list of what they want to spend and what they need to spend. Then they arrange that list in order of amount, i.e. the most expensive at the top and the least expensive at the bottom.
When people do this they often find that they don’t have enough income to live. This happens because human beings always have limited means but unlimited wants.
All three now have to cross off some items on their wish list so there is enough to meet the whole family’s needs. The family is now aware of their limited income and unlimited wants.
Former prime minister, Malcolm Fraser said, when reigning in the excessive spending of the Whitlam Era, “Life wasn’t meant to be easy.”
It is even tighter when the first slice of the pie is 10% deposited into a savings account. Of course, at this point, they are aghast at the suggestion of taking a further 10% out of the budget for savings.
The importance of living within our means plus saving 10% is a principle expounded in many books. One I recommend the family buy and read is tory.com/The-Richest-Man-In-Babylon-George-S-Clason/9780451205360?ref=grid-view&qid=1505250134452&sr=1-1″>“The Richest Man in Babylon” by George Samuel Clason.
This book dispenses financial advice through a collection of parables set in ancient Babylon.
Whilst this little family might think that life is tough, this is a great lesson for each of them to realise that the basics of economics and financial success have not changed for thousands of years.
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Other quick tips
Cut up the credit card; use a debit card for all card payments.
With the weekly shopping make a list as things run out, buy only what is on the list and pay cash.
Steve Taylor
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At the helm of Steve Taylor & Partners, Steve has been delivering expert advice and product knowledge to clients for over 30 years. We provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the above subject. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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