A Formula for Winning at Life: What I’m Teaching My Kids About Money, Careers and Life

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The passing on of knowledge through generations is one of the great blessings of parenthood. There are many challenges, of course, but being granted the opportunity to mold a small human into a productive, happy and empathetic citizen of the world is a great honour.

In the personal finance blogosphere there seem to be two main types of people – those brought up in a money-wise family and taught how to handle money from a young age.

They succeed earlier on in life. And then there’s me. A reformed credit card addict with a penchant for expensive handbags and a travel addiction.

Although my Mum taught me to budget for my core expenses, saving money was never really discussed and getting loans for the things you wanted was completely normal when I was growing up.

Now that I’ve got my act together I reckon I know a few things about money. That’s not to say I haven’t made mistakes – I’ve made loads – but if the only thing I can pass on to my boys is the benefit of my learnings, I’ll be a happy mother.

So here it is. A condensed list of my knowledge, for my babies. Also, some of this is ‘do as I say, not as I do’ kind of stuff. Because I’m your Mum. I have that right. If you’re thinking of teaching kids about money, I hope this list is of value to you.

1. Save a % of your income from the very first paycheck you earn.

The first and most important lesson. Start with 20% and work your way up to 50%. If you emerge from your schooling with the habit of saving half of what you earn firmly entrenched, your life will be a much smoother ride.

And yes, I do mean save 20% (at least) from your very first after school job. No dollar you earn later in life will be as powerful as the dollars you earn when you are young.

Young dollars have longer amounts of time for compound interest and investment returns to work their magic. Doing this will allow you to take advantage of many opportunities in your life.

Travel, quitting a crappy job, taking the time you need to recuperate from illness, all of these things are aided greatly by being a lifelong saver and having a healthy cash balance.

2. You can’t beat the market

Many people will try and some may succeed, but your time is better spent elsewhere. Invest in index funds as a regular contributor – automate your deposits – and your wealth will accumulate over time, whilst you are focussed on other ventures.

3. Buy real estate in an area with growth prospects

If you are going to buy a house – either your home or a rental investment – make sure the prospects for the area are good. Don’t make the same mistakes as Mummy did.

Please don’t fall for that “a home is an emotional purchase” bollocks. Whilst there is emotion involved, any house can be made into a home. And if life takes a turn for the worst and you need to sell, you don’t want to be stuck with an unsaleable asset.
Related post: Real Estate Investment – Oh, the Mistakes I’ve Made

4. Build a broad vocabulary and learn to write well

Read the dictionary. Each day pick a new word and use it in context. Stringing a sentence together is a skill.

Throughout your life, you will write essays and papers and memos and emails and perhaps a book. Doing it well could be the difference between a thriving career and being outsourced offshore.

5. Read widely and frequently

teaching kids about money
For interest, self-improvement and enjoyment. Getting swept up in the compelling narrative of a well-written piece of fiction is one of life’s greatest (and cheapest) pleasures.

Read novels, poetry, biographies of smart people, great people, read anything that interests you. Always remember the local library is a magical hub of concentrated knowledge, with endless opportunities for self-improvement. And being a member costs nothing.

6. Be curious – always ask Why & How

Asking questions will get you everywhere. Understanding why a company does what it does, or why a process or procedure is the way it is, means when you come up with an idea for improvements you will have the background knowledge to execute properly.

7. When everything seems too much, go for a walk

Without music or distraction. Just you, the fresh air and your thoughts. I promise everything will feel better after a walk.

8. Work every job like you own the business

Cut costs – even if you only manage the stationery cupboard, manage it like it’s coming out of your salary. Negotiate savings on products and minimise usage. Then report on what you’ve achieved.

Don’t ever utter the words ‘it’s not in my job description’ when asked to complete a task. Business owners do what needs to be done. Standout employees do the same. They are usually remembered and rewarded for doing so.

9. Learn from people who are smarter than you

In your life, you will come across many smart people. Try to learn from them. People in high-level roles like to identify and nurture talent.

Offer to buy your CEO lunch and ask how they started out. Use your teachers and mentors. If you don’t have direct access to such people read the biographies of people you respect.

10. Know the difference between good and bad debt

Some people think there is no such thing as good debt, but as a real estate investor, I have to disagree. Debt, when used correctly, can help make you richer.

You can leverage into real estate investments and to build share portfolios.
Bad debt enables you to purchase something you can’t afford to pay for with cash. Beware the fleeting excitement that comes with a new car purchase or cool new trainers when not paid for with cash.

Good debt: can make you richer (when used correctly)
Bad debt: Always makes you poorer

It’s more complex than that but if you ask yourself will using debt to buying this car, pair of trainers, holiday ultimately build my wealth and you cannot answer yes, then you better be able to pay cash.

11. Always sleep on big purchases

To assess whether something is a want or a need. Don’t fall for the hard sell. Have a policy and be prepared to quote it to a pushy salesperson.

Mine is this “As I’m not going to use your (high-interest bearing) finance deal, I need to go away and do the sums to make sure my cash reserves can handle this purchase”. Then smile and walk away. Self-control is a core facet of frugal living.

12. Don’t be afraid to seize an opportunity

Sometimes opportunities come up and decisions need to be made quickly. Always take an hour, go for a walk and then trust your instinct. Here’s when having a healthy savings account proves it’s worth.

13. If you don’t know how to do something, say Yes, then learn how

With a disclaimer: If you don’t know how to do something – but think you could learn – say Yes. There is nothing like a deadline or pressure from a client to make you learn a new skill.

14. Don’t ever stop travelling

I urge you to backpack around the world for a few years before you have kids. It will alter your worldview in a way that’ll benefit your entire life. Then when you have kids, take them along with you. Just make sure they visit their grandparents often 🙂 Or invite us along.

15. Don’t waste your time trying to be popular – make friends with people who interest you or make you laugh. They are the best kind.

Know that the best friends you will have will be from school or university. Perhaps work. Make sure you appreciate them. It is infinitely harder to make friends with people when you are older and not forced to spend your days with large groups of people outside of your family unit.

16. Recognise and appreciate your privilege

You have access to quality free education, hugely subsidised healthcare and clean water to drink. You will always have food on the table and a roof over your head.

There are (so many!) books on our shelves and toys to play with. When you are older there is money for you to pursue any activity you choose.

This makes you luckier than almost anyone else on the planet. Don’t squander your privilege.

17. Work hard but love your work – don’t stay in a job you hate

Your time is finite. Don’t waste your potential doing something you hate.

18. You are not better than anybody, and no one is better than you

Don’t ever assume that someone’s value or intelligence is defined by the clothes they wear, the job they do or the area they live in. Treat everyone with respect. Smile and say Hello.

19. Get a college degree

If you are unsure of what path to take I recommend an Arts degree. Even if it doesn’t lead to a job it will make you a more critical thinker, a skill that will serve you well throughout life. You can do study part-time while you work if you must, but please know this – Mummy is not ok with you skipping uni!

20. Give, whatever you can, whenever you can.

If you can’t give money, give time. But it’s almost always best to give money. Always have a little cash in your wallet for this purpose.

21. There is no such thing as overnight success

It’s usually years of work without pay, wanting to quit and then powering through the pain period. I like to think of a running analogy a friend of mine told me when I was struggling with my training.  “When you get to that point where you really want to quit (when you don’t think you can take one more step) it’s then that success is right around the corner” (or in the case of running, that was when the fat would start to melt off).

22. Avoid sugar – dentists are expensive.

When you feel a little pain in your tooth get it checked right away before a $100 filling becomes a $1000 root canal. Mummy learnt that one the hard way.

23. Live on as little as comfortable

I hope some of my habits will rub off on you. But I promise if you save a large percentage of your income, and minimise your living expenses, the world will be wide open to you.

Related post: The Opposite of Living Beyond Your Means

24. Find a partner with similar views on money

You don’t have to think exactly the same way, but you need to complement each other. Talk regularly about your budget and your financial goals. Life will be easier and more enjoyable if you agree on the money stuff. Mummy & Daddy’s life became exponentially more enjoyable when we combined our money and started to work towards joint financial goals.

This is just the beginning…

My darlings, there is much to learn, and no doubt this list will continue to grow. If I can teach you to be frugal yet generous individuals, with kind hearts and sharp minds, I will consider myself a parenting success.

So, dear readers, what do you think? Anything I’ve missed? Tips for raising awesome kids? All advice and criticism welcome.

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*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Money Can Buy Me Happiness

Teaching kids about money | raising happy children

Emma

Emma

Hi, I'm Emma. I set about gaining financial freedom back in 2012 when my son was born. I've been hustling to pay down debt, save money and build online and passive income streams ever since. You can find out more here.

34 thoughts on “A Formula for Winning at Life: What I’m Teaching My Kids About Money, Careers and Life”

  1. Not sure how to articulate it just yet, but something around becoming highly employable. Creating and protecting your ability to earn a living and support yourself. That’s really the foundation for so many things.

  2. This is SUCH a good list. I am determined to help my daughter out with her financial know-how when she is older – she is 4 now. My husband is awful with money and I blame his mum, lol. She is a spender and spoils them like mad.

    The main thing I want to do for my daughter is lead by example 🙂

    • Thanks Francesca. My Mum is the same with my boys. Sometimes when my eldest asks for things I tell him to ‘ask Nana’ when he sees her next 🙂

  3. I’ve just found your blog Emma (via your comment on Retire By 40’s site), and have read a few of your posts this morning. Great work and so good to find another kiwi’s personal FIRE site. I’m from Auckland but living in Brisbane now (don’t like the cold) but come back to NZ a couple of times a year.

    Great article above. I just read a post from another blogger on a similar subject and commented that they should be teaching this stuff in schools.

    Especially the part about saving a % of your pay from day one of your working life. I wish I’d had the knowledge and foresight to do that from an early age. I could have retired 10 years ago.

    Looking forward to reading the rest of your post and your future ones.

    Cheers, Martin

  4. Love this! I think by modeling, open communication, education, and empowerment kids will have a great foundation for being money smart kids. One area I’m already finding challenging is the peer pressure our kids face around spending and things. Any thoughts on this?

    • I wish I knew, Christina. My 3 year old is already asking why his shoes aren’t like the other kids at preschool. Seriously, I didn’t know peer pressure started this young!!

      • Ugh! Peer pressure in every area too, down to the shows they watch! Great article. I just embarked on a summer game to make the act of saving fun for my little ones this summer. It’s led to a few fights, lol any competitive games tends to end there. But it’s getting them to put the money in their banks rather than spend at the store.

  5. #22 is golden. It made me laugh out loud. It’s also SOOOO true!

    I was away from the dentist for three years but, as a general rule, I avoid most sources of sugar. The verdict? Here’s what the dentist said: “Your teeth are great! Did you say you haven’t been here in three years?!”

    Here I’d been feeling sheepish about my absence but he made me feel like a million bucks…and I got a free toothbrush. 😀

    • Hooray for a free toothbrush! I, on the other hand, had pain for about 6 months before I finally worked up the courage to go. The dentist was like ‘so, if you came to see me 6 months ago, I’d just be doing a regular filling’. Lesson learnt!

  6. This is such great advice, and not just for kids. For people whose parents didn’t know these things, it’s never too late to learn. Thanks for articulating it so beautifully.
    Life is truly about the choices we make, so it’s important to educate ourselves and make informed decisions.

  7. I agree with most but heavily disagree on #19. You shouldn’t get a college degree just to have a college degree, that’s why most people my age are in student loan hell. They don’t know what they want to go for so they go for some crap degree like English or Arts and come out with 30K in debt for a degree that they can’t use. You don’t NEED a degree. Sure, statistically college graduates make more money than HS grads. But there are lots of options such as community college, unions/trades, internships, etc. that are much cheaper and give better work experience than sitting in a college classroom for 4 years. Most employers will even pay you money to go to college. You’d be surprised at the number of professional jobs that don’t require any college credits.
    If you don’t know what you want to do, either start working, go into the military, try a trade/union, or at the very most do a community college. You can always transfer to a 4yr if you find a degree that you are interested in.

    • Thanks, Brandon. If we were in the US my advice would be ‘go do your degree overseas’. We live in New Zealand though and student loans are 0% interest here. I have an arts degree that I studied for part-time whilst working full-time in marketing. The critical thinking skills have added immense value to my life. But I can definitely see where you are coming from.

      • Ah, I didn’t realize you were from NZ so that makes more sense. I’ve always been curious as to how different countries operate and how they differ from the US. Good to see that it is feasible to have a 0% student loan interest rate and still be profitable as a company/country.

        • Plenty of people take advantage of the scheme, but once you are earning over around 19k per annum repayments are automatically taken out of your paycheck at 12% of your earnings. Our student loans are facilitated by a govt dept, banks don’t get involved at all. Although lots of students take on overdrafts and personal loans for extras, although it’s not necessary.

  8. Especially agree with #4 & 5. Knowledge is the foundation of wisdom, and there’s no easier way to gain a broad knowledge than to read, read, read, and write, write, write.

    Reading brings the knowledge in, and writing shows how well you absorbed it.

    • Yes, Jack! So very true. It might be completely idealistic, but I truly believe a person with access to a library has the opportunity to learn anything they want and completely change their lives.

  9. My two favorite traits are curiosity and empathy. Both will grow you in enormous ways you cannot imagine. Both will sustain you. Both will make people like you. Nurture them.

  10. What a great list! Lots that everyone can learn here. I’ll have to agree with Brandon somewhat on college though. Maybe get a college degree when you know what you want to do (or go to trade school). My degree in philosophy and history didn’t serve me particularly well, but for my friends who knew what they wanted, it was critical. So take the time to figure it out, but then get a higher education.

  11. Great freaking list. Lots of great knowledge that you passed along to readers and other like us in dividend community. I think my favorites are to know the difference between good and bad debt, you’re not better than anybody and nobody is better than you, and save as much as you can when young. If you can start embracing those principles, and the others you listed here on this website, yourself up for success for the short and long term.

    I also must say I loved your intro to the article. Some of the best lessons are learned through failure and in my opinion. Those experiences really drive the point home unfortunately but if embrace the lesson you always find a way to end up on top.

    Thanks again for putting this list together and sharing your experiences!

    Bert, One of the Dividend Diplomats

    • Thank you, Bert. I really appreciate your comment. I’ve failed so many times and am still failing on a regular basis. At least by blogging about it someone benefits and hopefully it stops others making the same mistakes.

  12. What a great list! I will definitely keep this in mind as we’re raising our kids to (hopefully) savvy, kind and self-reliant people.

    I particularly like #13: first say yes and then learn how to. I’m still learning how to do that myself.

    • Thanks, Mrs CTC, that wee pearler was something I was told by a former colleague when I didn’t believe I had the skill to take on a new role. He said to me, “you might not have the skill, but you have the ability to learn the skill”. Thank goodness he had faith in me!

  13. If only I had known #one when I turned 14!!! I’m sure a lot of people feel that way though and there is no better time to start than today?

  14. My husband’s a CPA and a financial planner; and I’m a qualified financial planner (although at the moment I’m not actually working as one) so you’ll call me biased, but I would say, use experts where you can. Pay someone who knows what they’re doing to do your taxes – you’ll probably end up with a bigger refund. Work with a financial planner – you’ll probably end up with a higher net worth. Sure, you can do it yourself – just like you could also build an extension for your home yourself – but the extension might fall down because you don’t know what you’re doing; and you might lose a lot of money making little (or big!) mistakes that could’ve been easily avoided if you’d hired someone to do it properly for you the first time. Good advice is worth paying for.

    • That’s great advice Becca. I love my accountant, she has got me out of some pickles in the past and I think she’s worth every cent!

  15. I love the mix of practical and aspirational! So important to set our kids up with realistic expectations but also to encourage their dreams. Thank you for this list. I need to print it out and refer to it often!

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