Another post in my Teaching my kids series
As frequent reader of my blog you know that I’m writing some posts to try to financially educate my kids. I know they are still very young (7 and 10) but it is never too early to start. And they can read these blog posts later on in life 😉 (This is probably the case, because they don’t speak or read English very well at this moment – You got to love an understatement!).
This is another blog post to keep the “snowball of knowledge” rolling.
I think when you educate kids about money, they will benefit from it for the rest of their lives. Or as the saying goes: “What is learned in the cradle is carried to the tomb”. And to educate your kid is your responsibility as a parent.
Last week I was talking with colleagues about money and kids. After a while the question arose over which important money lesson you would give your children. In this post I will write my most important lessons.
10 Important money lessons
- Pay yourself first: Always pay the most important bill first, and that’s the bill to yourself. Or in other words: before you pay your bills, before you buy your groceries, set aside a part of your income. The first bill you pay, after you have received your paycheck, is yourself. See also Lesson 9: First Things First.
- Always spend less than you make: If you want to advance financially in your life it is important to save money. If you already use lesson number 1, also try to use lesson number 2. With these two lessons you’re set to go ahead.
- Compound interest: Let your money work for you. Let the 8thwonder of the world do its magic for you! The earlier you start, the harder it can work for you. So start early, your older self will thank you! See also Lesson 3: Compound Interest.
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
- Buy a home, don’t rent: By buying a house and by repaying a part of your mortgage every month, you will slowly build your wealth. Or to put it in other words, Renters stay poor and homeowners build wealth.
- Always buy assets: To build your wealth, you need to let you money work for you! Don’t buy liabilities but assets. This will make all the difference. See also Lesson 15: The Secret.
“Your assets are your employees”
- Be an investor: Investing your savings/money can allow your money to grow. It is scientifically proven that investing yields more than saving in the long run. And dividend investing has some mayor advantages. See also Lesson 8: Why dividend investing.
- Never invest in things you don’t understand: If the investment can’t be explained to you on one piece of paper it’s too complicated. If you can’t explain it to a 10 year old, just forget it.
“Know what you own, and know why you own it.”
- Invest for the long-term: As already stated in lesson 6, investing yields more than savings, and if you want to let compound Interest do its magic, you need time. Building wealth takes decades not days. SO always invest with your long-term glasses on. Or as Warren Buffett said:
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”
- Don’t try to time the market: It is impossible to time the market, investors who time the market always fail. So stop trying! It is more important to be on time in the market, than timing the market.
“You make most of your money in a bear market, you just don’t realize it at the time.”
- Never give up: No matter what happens, no matter how many times you fail as long as you get up and try again you haven’t lost.
This is my 21stblog post about teaching my kids. I hope my kids at the age of say 18, have all the financial knowledge I’m having right now. This would be a huge advantage for them! And that’s why I started these blog post series.What do you tell your kids about money and investing?
What are the money lessons you have learned and teach your children? I like to hear from you!
Help me get the “snowball of knowledge” rolling and share this post.