A guest post from Lovely Merdelus, CEO of BRANDMELOVELY.
If you don’t talk to your kids about money they’ll be adults who are scared of money or worse, adults that don’t interact with money wisely. That’s what happened to me until I decided “enough was enough.”
I was 18 years old when I realized how little I understood about money and how to make it work for me. My mom was a single mom and worked really hard to give us the best possible education. But that left little time for the “money talk”. I also realized our school didn’t have a financial education courses although we took math since our first year in school.
I was 18 years old and started college when my mother had a stroke one month into my first semester. My mom would end up being in the hospital for three months and the first three weeks be in a coma. I had to pay all the bills and make money decisions that I never had to make before. This experience was my big wake up call.
I’ll be sharing the top three things I learned about money that changed my life and hope they’ll change yours.
Money is a resource and tool, don’t abuse it
Some people abuse money and often become so focused on making money that they lose sight of what really matters. Teach children early on that money is a tool, and, when used wisely, it can unlock good things. Money is not something to be idolized. While money is important, I’ve learned that loving money too much can put one in a scarcity mindset. This can be debilitating. Having a healthy risk with money can is empowering. As one example, by respecting and saving money I was able to start my own business at the age of 20. I’m now on business number three and making a living full-time as a result.
Understand how credit works early on
I remember the first time my mom talked to me about credit cards. To sum her message up: “credit cards are bad, don’t get one and if you do it you better be able to pay it”. The challenge with credit cards is that they make it easier to live beyond our means. And credit card debt is flat out dangerous. Bills must be paid, in full, every month. Yet credit cards are tools that can be leveraged as well. Kids should be taught to have a great credit score! This will make their future lives easier. If they want to pay for a home or change jobs, having a strong credit report will be a factor, and we should teach this to children as they start to spend.
As an entrepreneur or someone with a job here’s what I’ve learned: pay yourself first. For me, this looks like 10% of my income automatically going into to my savings account. I also set aside 10% to give to others (my mom taught me the importance of giving and that’s one thing I’m grateful she didn’t forget to teach me about!). When you spend everything you make, it doesn’t allow you to save or understand that you are valuable too. Understanding this concept has changed the way I look at money. Also put aside money for a rainy day – like an emergency or time between jobs.
Take control of your money mindset and the way you use money. Teach your children the same. Start having the conversation and taking action today.