5 finance lessons we can learn from our parents
You have no doubt heard it said a thousand times before but things are very different for us these days than when our parents were starting out in adult life. In today’s society, people don’t think twice about taking out a loan or a credit card to enable them to buy something immediately rather than saving up for it. Perhaps that’s why our parent’s generation is now ling mortgage free planning how to spend their retirement years using this handy tool from SunLife without having to worry. It certainly made Simon and I stop and think about how different the picture could look in our retirement unless we make some changes now. So what can we learn from our parents? Let’s have a look and see;
Live within (or below) your means
When you receive your salary each month, do you budget what you have? Do you put money into savings for a rainy day or do you just blow it without thinking about the consequences? Learning to live within or below your means is the key stepping stone to financial freedom. You can save money, pay off debts, buy the luxury items without having to take out credit or plan that holiday and enjoy it without worrying about what it will cost you long after the holiday is over.
Each month only spend what is necessary; bills, food, fuel, clothing – don’t spend for leisure, to lift your mood or ‘just because’. Before making a purchase, ask yourself “do I need this?”
Money doesn’t grow on trees
You know you’re a parent when you start quoting this to your children. As children, it was one of those common phrases our parents would say to us and even though we vow we won’t turn into our parents, years later here we are saying exactly the same thing. Why? Because it’s true! As much as we would all love a magic money tree growing in the back garden, it’s not going to happen which means the only way to get money is to earn it.
As parents, it is our job to teach our children this valuable lesson. We intend to give the children pocket money and will advise them they can keep half each week but must save half so that they can see how easy it is to save as well as have a little spend.
It’s never ‘too early’ to save
Saving in our parents’ era didn’t have so many options but that didn’t stop them putting money away for a rainy day. The younger you start saving, the more money you will have in the long run and the better the habit becomes to save money rather than splurge it on unnecessary items. It also pays to learn from a young age to learn to shop around. This is one lesson that my Mum taught me and I am so glad she did. I can be an impulsive person when it comes to shopping, but my Mum showed me the value of shopping around first and finding the best deal which often saved me money.
Patience is a virtue
Don’t be tempted to rush out and buy something which you can’t afford using the ‘buy now, pay later’ options, store cards or loans. You’ll get a short-term rush from purchasing the item but then feel low once the bill comes through, then you’ll buy more to make yourself happy again and the vicious cycle continues. Instead, write yourself a wishlist of the things that you really want and stick it up somewhere you will see it regularly. Your subconscious mind will help you to find ways to make the purchase without getting into debt. Saving up, selling unwanted items to pay for new or making a second income stream.
Record what you spend
Again, this is a lesson I learnt from my Mum and it really helps me to watch what I spend. Keep a visual record of your spends every single day. Keep a note on your phone or in a physical notebook in your purse. All those little purchases like a coffee on the way to work, or that magazine on the train home. These are the spending habits that are easy to dismiss but can make a big difference to your bank balance. Have a separate page which shows all of the money you have earned that day/week and see how it compares.
Today’s society talks about mindfulness a lot, it’s worthwhile applying that to your spending too if you want to sit comfortably in your retirement years.