Home And Business Finances For Work At Home Moms

What Financial Planning with your Kids can Turn Into

I laugh. Actually I don’t laugh, I scratch my head. My parents were the instigators of my financial success – both on purpose and completely by accident.

I am 30 years old and have done well in life so far. I have quite a few assets and investments and my only debt is in my home and two condos I own in downtown Vancouver.

I don’t have excess cash flow with a million bucks sitting in the bank. If I’m lucky you can call me a “thousandaire” on a good day. But I’m also not in credit card, school or personal loan debt. Why? And how did I get all this stuff if I’m not rich per say? Again I attribute that to my parents. Good planning, careful spending and smart decision making as a result of their lessons (and lack of) made the all difference.

My parents are very modest people. My dad was a stay at home dad on unemployment. My mom worked 60 hour weeks trying to keep our family above water. To this day they still don’t own a house. They are a year away from trying to retire at the age of 65. But are they ready? No. Not even close. They don’t have enough to last them to 85 should they live that long, which I hope they do. They are likely going to end up working till they are 70 years old and then still have to pay rent in one of the most expensive cities in the world just to be close to their kids.

But, as a result of their lack of long term planning (which inspired me NOT to be in the same situation) and good teachings about short term money management when I was young, I’ve been able to make some good decisions so far. Here’s what they taught me:

  1. Never, ever spend more money than you have, unless it’s an emergency and you have no other choice for your or a loved one’s life. Cash flow is king. You don’t need a credit card to buy something you want. Just slowly save for the things you would like and buy them only once you have the money in the bank.
  2. Start building up your credit when you’re young, then make sure you pay it off right away – always! This will help you build up your credit which will allow you to be approved for thing like mortgages, business loans, and personal loans.
  3. Pay off your highest interest debts first. The accumulation of interest that goes unattended can drive you quickly into the ground. You may never recover.
  4. Invest in assets, not liabilities (unfortunately something my parents learned WAY too late in life, which is why they don’t own a house but have travelled to almost every remote tropical beach in the world :P)
    Put together a five year financial plan. I did my first when I was 18 with the goal of having $10,000 saved by the time I was 23 to buy my first house, which I did.
  5. I’m sure there were a lot more things my parents could have taught me about money if they knew better, but look! I learned five great lessons that made all the difference to me and my family now, and for that I’m grateful.

If you have the chance (and even if you don’t, MAKE the time), try to teach your kids responsible spending and money management when they are young. They may hate how boring it is when they are 9 years old, but they will reap the benefits of it when they get older and have to manage their own financial decisions in the real world.