Bad Lessons Your Parents Taught You About Money
May 27, 2015
Money lessons aren’t typically taught in school, which means it is the parent’s responsibility to teach these lessons to their children. Personal finance we feel is one of the most important lessons that parents are in charge of passing down. However, we all know that not everyone is a great teacher, especially when it comes to money. Not every parent is money-wise themselves and even those that are can mess up sometimes.
If your parents taught you anything about money growing up, it is likely that they taught you some wrong lessons about it. Here are a few things that we encourage you do NOT teach your children when it comes to finances.
1. Credit Cards are for emergencies only.
This is not true, credit cards can be great to build credit and earn rewards. If you don’t ever have a credit card, or have one but never use it, it can curb your ability to borrow money, secure a place to live or even open utility accounts. However, make sure that you discuss with them how to charge on it responsibly. We suggest that you and your children charge only what you can pay off in full each month. You want to have a credit card and use it wisely to help you build your credit.
2. Getting a good education will guarantee you a good job.
The rising costs of college and the dismal job market means this lesson doesn’t always apply anymore. We have found that what is even more important than an education is work experience and worth ethic. If your child is going to go to college, consider opening up a 529 plan for them and encourage them to work during summers or while in school to build their resume and increase responsibility.
3. Investing is risky – keep your money in the bank.
This is definitely not good advice, especially when looking at putting your money away for the long-term. Saving money in a liquid savings account is crucial when it comes to paying for day-to-day expenses. When it comes to long-term investing, for instance your retirement, you need something more. Consider using a Roth IRA and taking advantage of investing in accounts that can help you for the long-term.
4. Work hard for your money and it will pay off.
Learn how to save and preserve your money and make it work for you. A lot of people work hard everyday, but without some education and skills in personal finance, they don’t know how to channel that effort into lasting wealth. Most Financial Advisors will offer a free initial consultation. If you would like to meet with someone in our office, please call us at 763-231-9510.
5. Money can’t buy happiness.
We know that you can’t physically buy happiness with money, but according to Gallup Poll World Data in 2014, they found that a higher level of wealth really does equate to an overall higher satisfaction with life. The truth behind this is that most people are happiest when they have some money in the bank and are not stressing about how to pay the bills every month.