By ROSS MARRINER
Teaching your children how to manage their money successfully is one of the greatest life lessons you can give your loved ones. Fortunately, life lessons and money lessons are not mutually exclusive. There is usually a strong correlation between the values associated with careful money management and those of raising well-rounded children. This is especially true when it comes to investing. Let us take a closer look at some of these values and how you can pass them on to your children.
Showing your children how to plan for the future can make an incredible difference in many areas of their lives. Setting goals can help them to establish a sense of purpose for their actions. This can also help to improve their decision-making abilities and levels of self-confidence and teach them the importance of perseverance. These are all excellent qualities to have when it comes to investing. Teaching your children how to focus on achieving long-term goals instead of focusing on instant gratification will ensure improved investment outcomes over time.
Teaching your children patience can help them become more disciplined and more likely to focus on what is important. They will hopefully be less likely to accumulate debt and become better equipped to make sensible, considered life choices. Investing can be tricky, and your children will be challenged from time to time as they realise that investment values do not only go upwards. Being patient and able to sit tight and endure the ups and downs of investment cycles almost always pays off, particularly when investing for the long term.
An essential component of investing is to make decisions that are not influenced by emotion. Making emotional investment decisions often leads to selling when prices are low and buying when prices are high, resulting in a permanent reduction in wealth. Keeping their emotions in check when making important decisions is a key lesson that will stand your children in good stead in many areas of their lives.
Humility teaches your children the importance of listening to the ideas and perspectives of others, thereby allowing them to make informed decisions and teaching them that asking for guidance is a strength, not a weakness and is a valuable lesson to learn. Trying to do things independently can sometimes mean losing money when investing. We live in a time where we can access information on just about anything at a click of a button, but not all the information we access may be accurate or even true.
Equipping your children as best you can with the best possible means of becoming financially successful is essential. By adopting these life lessons, your children will hopefully be better equipped to achieve their financial goals. It is sensible to consult with an experienced Certified Financial Planner® who will be able to assist you and your children in making considered financial decisions.
Rands and Sense is a monthly column written by Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth. His Financial Planning Office number is 046 622 2891