One Money Habit
My journey in financial literacy education started with this question - If I could only teach a child one money habit, what would it be?
I wanted it to be actionable, something they could do. I wanted it to be transformational, something that would have a significant impact on their lives.
Ultimately, I concluded it was to "get in the habit of saving money!"
My thoughts were these.
First, making a habit of saving is the equivalent to paying yourself first. When you pay yourself first it gives you access to compound interest. When you pay yourself first, often it leads you spending less than you earn.
Second, it is something kids can do. Kids can start with pennies. They can do it in piggy banks, saving jars, or even at a bank or credit union. Kids don't have fixed expenses. And today, particularly in the United States, they have unprecedented access and influence over money choices.
Third, if you were able to get a child in the habit of saving it would transform their lives. It puts a person systematically on the path to greater financial security, stability and freedom. And, it could have a compounding effect on the lives of those people and communities they touched.
Your Thoughts
Since I asked myself that question, I have made it a a standard practice to ask others the question. The responses have been Sammyriffic!
This is Part 1 of a series where we will feature 3 of the responses we have received through the years.
If you would like to be featured and share your thoughts on the question, contact me or post a comment on LinkedIn to this blog.
Let's end financial illiteracy one question, one communication and one post at a time.
Together, we can. All welcome. Enjoy!
Gerri Walsh, Senior Vice President, FINRA Investor Education & President, FINRA Investor Education Foundation
Pay yourself first. When a child receives a gift or earns an allowance, encourage him or her to take a portion of that money and set it aside for the future. Doing so can help cultivate an ability to accept and even embrace delayed gratification, especially if the child can spend some portion immediately. In a world where so many messages encourage us all to spend, finding the strength to short-circuit our impulses can pay massive dividends in the long run.
Devin Banerjee, Editor at Large, Business & Finance at LinkedIn
Live below your means. As my favorite money writer, Morgan Housel, notes: How much you make doesn’t determine how much you have, and how much you have doesn’t determine how much you need.
What that means to me — and the way I would explain it to a child — is: If you earn an honest living and find happiness in immaterial or inexpensive things, you will be wealthy.
Jonathan Clements, Financial Writer - Humble Dollar dot com
Delayed Gratification. Without a doubt, the most important lesson a child can learn is the ability to delay gratification. If you don't have the discipline to say no to every immediate pleasure or offer, your struggles won't only concern limiting your spending. A lack of self-control is also associated with difficulties in school, career struggles, obesity, and addiction.
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