We all agree that home for anyone is the first school especially the financial lessons our mother has taught us. However, apart from the simple lessons that we observed and learned from our parents, most parents never sat down and taught their kids about money.
For instance, the financial realities of being an adult, how to begin and where to begin is never taught at school or by our parents and therefore becomes overwhelming. The problem is even our parents were not by their parents and the chain just goes on.
Here are five money lessons I wish my parents had taught me:
→ Saving money smartly
“Save money!”, “At least 20% of your income should be saved”, “Open a Fixed Deposit as soon you get your first salary!” and so on! We all must have grown up hearing either of the statements above. Whilst saving is an important financial lesson, our parents never taught us to save the money smartly or tell us there was more than one way to save money.
The importance of investing and how we can use the money to make more money were learned all by ourselves. In India, saving generally indicates opening a fixed deposit or recurring deposit. The interest earned is considered good enough by our parents. However, investing in the stock market/mutual funds or in different options were never an option.
→ Staying away from credit
Any type of credit has always been restricted to Indian families. We were always told to stay away from credit and heard a lot of negative comments about credit while growing up. Whenever they were told about credit card offers, their responses were stuck to something such as “Credit card is another form of debt trap” “You will spend more than you earn with a credit card” and so on!
What they didn’t realize or teach us that if a person uses his/her credit correctly, there is no need to worry. Moreover, it can also be in one of the ways to save more money. For instance, using a credit card for spends can help redeem more rewards in comparison to a debit card or cash.
Another important factor is establishing a credit history. There was no value given to credit scores or credit history when we were growing up. It is when we wanted to apply for credit did we realize the concept of credit scores and reports.
→ Keeping “I” as a priority
As Warren Buffett and my parents, I should never save what is left after spending, but spend what is left after saving. Although this was an important and one of the significant financial lessons I received, it is not always the same. Sometimes, it is okay to let go and enjoy the moment. The phone that you’ve been yearning to buy or the PlayStation you’ve been hoping to get your hands on, no one told us that sometimes it’s okay to be carefree.
That said, keeping yourself as a priority does not mean you spend thinking you can make the rent next month. Always keep some money for your basic necessities before splurging.
→ Anything about taxes
Remember the first time we were filing our first income tax return? How daunting it was! Although we all have heard the term ‘tax’ since our childhood, it is when our own money was taxed that we came to know about this in detail.
My parents never taught me which tax-saving instruments yield more returns or are better as per my requirements. I came to know about all this when I did my own research and googling.
→ Planning for your retirement
In today’s world, it is difficult and expensive to retire. In fact, retirement seems to be a far-fetched concept that would just eventually happen. However, the heads up required to plan for retirement was missing from my parents. They were consistently keen to know whether I was saving or not in general but never asked about my retirement planning. Or even that I should start early when it comes to retirement.
I used to be a live-in-the-moment type of person and never worried about my future up until I came to know about my friend who had already planned his retirement. He told me he had already invested in retirement plans apart from his Pension account.
So, there you go! These are the five money lessons that my parents never taught me and I wish I had learned when I was growing up. Although such financial lessons are taught by example, I learned it the hard way, by struggling with my finances.
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