These top money lessons are actually less about money and more about character. Which makes them the kind of life lessons that everyone should learn as early as possible.
I got my first job at age 12 and I’ve been working ever since. I wouldn’t say I have “nothing to show for it” (though there we definitely times in my life when that was true), but I reckon if I’d have learned these important money lessons at school I would be far wealthier today.
When people say that money lessons should be learned at home, not at school, I always figure they had exceptionally financially savvy parents. Most parents (my own included, back in the day) don’t tend to talk about money with their kids. I mean, they should, but they don’t.
No money talks about money talking
In fact, a survey conducted by BECU found that 72 per cent of parents aren’t having the talk with their kids. Some of the common reasons cited are:
- Parents don’t feel financially literate enough themselves
- They weren’t taught money lessons by their own parents
- Parents think someone else should educate their kids about money
- They are too scared to have the talk (and probably generally parent their kids?)
So, plenty of kids aren’t receiving any advice about money at all. A crying shame when you consider that one of the golden rules of wealth creation is to start as early as possible. It’s clear, we can’t leave the money advice up to parents.
When I think about what I know now, there are some fundamental money lessons that I wish I’d learned in high school. Of course, all the good advice in the world will probably go over the heads of most rebellious teens, but at least we will have tried, right?
1. Invest early and regularly
I don’t want to think about what my bank balance would look like if I’d started investing a portion of my salary from my very first job. One look at Warren Buffet’s net wealth and you won’t want to think about yours either.
It’s probably not enough to simply say “put 10/20/30 per cent of your income into a separate account/investment/etc”. That’s the outcome. The true money lesson here is learning the discipline required to not miss the money you’re putting away. It’s knowing that future you owns that money, not present you. Present you can’t miss what they never had.
2. Get the ‘what ifs’ covered
There’s the investing (see above), and then there’s the planning for anything. Build an emergency pile of cash and you’re really building security. Whatever life throws at you, you can manage. I can’t think of a better way to spend your money than buying your own peace of mind.
Because that’s what this lesson is truly about: being responsible. Having your own back and knowing you’ll be okay because you made a plan.
Stockpile it, put it somewhere accessible and safe, don’t touch it unless you truly need it. No need to overthink it; you’ll know if that time comes.
3. Live within your means
Lifestyle inflation is real, people. It eats into everyone’s savings and makes us buy stuff we really don’t need. Fact is, most of us spend as much as we earn, no matter how much our earnings increase. We were fine living off $X five years ago, but now we struggle on $Y. Sure, general inflation goes someway to explaining this phenomenon, but so do fancy cars, extra televisions and the latest mobile phone.
Just like investing early is really about learning discipline and having an emergency fund is about responsibility, living within your means is about conquering FOMO. Staying in your own lane and measuring your worth by the things you do, not the things you own. It’s about learning the difference between what you really need and what you just want.
Your grandmother would be familiar with all of this advice. She knows all about making do and being grateful for what you already have, rather than chasing what someone else has made you want.
Spend less than you earn, whatever that may be. Invest or bank any bonuses or windfalls, because you actually don’t need them. Save for anything you want. Don’t use credit cards you can’t pay off each month.
And so on.
4. Know your financial goals
It’s really hard to stay on track with your money if you don’t have a basic idea of what you’re saving for. It’s not enough to be on the “I want to be rich” train if you want to stay on track (or maybe it is for some, but not for me, and probably not for you either).
What kind of life do you want to be leading today, next year, five years, 10 years and beyond? What really matters to you enough to make some sacrifices to get there?
Like the other three rules, setting financial goals is less about money and more about learning what you really value. What lights you up and how can you structure your money so you can get more of it?
This is actually one of the hardest money lessons of all. It goes straight to the heart of the kind of person you are and who you want to be. It helps you plan your life so that everything that matters most to you is given the highest priority.
Now, wouldn’t that be an amazing thing for a high schooler to learn?