You might remember doing word problems about money in your 2nd-grade math class, but beyond that, you probably won’t have many memories of learning about money in school. That’s because only 5 states in the U.S. make Personal Finance a full semester high school course that’s required for graduation! Due to that sad fact, the role of the parent in teaching their kids about money is critical.
Your first teachers in life, before you even start school, are your parents – but unfortunately, statistics show that most parents don’t teach their kids about money because it is still a big taboo in our culture. For nearly half of Americans (47%), the topic of money was never or rarely brought up in their household when they were growing up.
After thinking about this concept, I listed out some things I wish my parents had taught me about money growing up. I making the commitment to teach these principles to the next generation of my family and to share it with you too! Here are the top 3 things from my list:
- I wish my parents had hammered in the habit of being a saver. I call this the ABC’s of money – Always Be Collecting. Collect birthday money, allowance money, graduation money, side gig money, holiday card money, lifting couch cushions to find loose change money… Just save up ALL the money! It’s important for parents to model and talk about saving money often so that even young children can begin to develop the mindset and habits of a smart saver! After all, the more savings you have the less stress you have!
- Invest, invest, invest! I wish I’d learned to invest as early and as often as possible. Now, I do NOT blame my parents for not teaching me this because they never learned it themselves! As immigrants, they experienced cultural and language barriers that made the stock market a difficult thing to access for my parents. They barely even used bank accounts because they dealt with cash from day to day. However, there’s NO way a traditional bank account will help you significantly combat inflation. In 2019, interest rates for traditional savings accounts are as low as .01% and average about .09%, while inflation averages 2% per year! The best way to grow real wealth over a long period of time is by investing in the stock market using a well-diversified investment portfolio. If my parents had known this and had taught it to me, then I’d be a 29-year-old, female version of Warren Buffett!
- Human Capital is just as important as Financial Capital. Money is important – YES. But, developing profitable skills will bring you more money later in life. My parents were so caught up with instilling their kids with a strong work ethic and they talked about the importance of hard work all the time! But I wish they had taught me more about working smarter and more strategically. For example, researching profitable jobs, careers, and industries rather than just working odd jobs to make a quick buck.
I’d love to hear from all you readers! What are the top things you wish your parents taught you about money? I highly recommend spending some time to reflect on this and then committing to teach your kids important financial lessons one day. By doing this you and I can prevent the topic of money from still being taboo in our society decades from now!