PLAN & SAVE
career, business & Finance By Cary Siegel, author of Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By
Are You Teaching Your Kids Responsible Personal Money Management?
T
he most important lessons you can teach your children pertain to personal money management, which is one of the most important skills they need to learn.
your spending and focus on what is most important to you. It means, “living smartly.”
With all the issues facing teenagers today, why is this one of the most important?
actually quite simple. It must be done. You cannot manage something you are not tracking. The concept is clear – more money must come in every month than goes out! A simple budgeting process to use allows three most important parts to be completed: developing, tracking and analyzing. The analysis part is so important. Where did you spend too much? Where did you not spend as much? What else do you need to include next month? What is in your emergency fund? What are your financial goals for the next 12 months? Remember, you will always have trade-offs!
Three reasons: 1. Schools teach them absolutely nothing about personal money management. 2. The example set by our society is to spend more than they make (in other words, debt is good). 3. It is one of the most important skills they need to take into adulthood. Three “must teach” principles:
Always live below your means. If you want to manage
your money successfully, this is one of the most important principles to follow. This is where most Americans have gone, and will continue to go, wrong. People want to have everything…now. They just cannot wait until they can afford it. However, you must wait until you can afford something before you buy it. If you make a habit of purchasing things you cannot afford, you will quickly begin a downward spiral that will continue until you go bankrupt. Plus, you will enjoy your purchase even more. If you always live below your means, you will always have extra money to save and invest. Over the years, your money will grow and you will find yourself with significant financial security. Keep in mind that living below your means does not mean living badly. It means you prioritize 56
July 2014 | azhealthandliving.com
Develop a written budget and evaluate it every single month. People think this is painful but it is
Save and invest 50 percent of every salary increase.
This is an easy principle that requires a little discipline. Think about it; you were living on your old salary before you got a raise. You can have the best of both worlds. You are still going to live better, but why not invest some for your future. Most people don't do this because they get behind in the first place. They start by spending more money than they make in the first place. You just cannot do that. If you employ this principle, you will be shocked at how well you do financially over time. Ninety-five percent of adults do not follow these principles because they have been told that debt is OK and they are trying to keep up with the Joneses (who, by the way, are bankrupt)! If you follow these three basic principles, you will become extremely adept at personal money management. Take the time to talk with your children about all the issues that confront them. Especially, take the time to discuss the issue of personal money management.