Exciting news! I'm getting married soon, and my partner and I will be expecting a child. It's a joyous moment, and as a parent, I've been thinking about the financial lessons I want to pass on to my child. While I believe in the importance of formal education, I also prioritize homeschooling to ensure my child receives a well-rounded education, including financial literacy.
Traditional schooling often doesn't teach individuals how to build wealth or become financially savvy. It's not because the teachers don't want to, but rather the curriculum focuses more on creating obedient employees. As a father, I want to equip my child with money secrets that will empower them to dream big and manage their finances wisely. Here are some of the lessons I intend to teach:
Money never retains its value: I'll emphasize to my child that money is a medium of exchange, a unit for accounting, and a store of value, but it loses its value over time due to inflation and oversupply. Unlike in the past when money was backed by gold, today it is backed by the government's word. It's important to understand that money's true power lies in how it can be used to make more money and grow wealth.
Save, but don't rely on savings to become rich: I'll explain the importance of saving money for emergencies and to accumulate capital for business or investments. However, I'll also stress that solely relying on savings won't lead to wealth accumulation, as money loses value over time. Instead, I'll encourage my child to invest their savings wisely, taking calculated risks to generate revenue and compound interest. While investments carry risks, leaving money idle in a bank account can be even worse in the long run.
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Differentiate between cash and credit: I'll teach my child the value of having cash on hand. By cash, I mean anything liquid that holds a fiat value, including cryptocurrencies. Cash provides a competitive advantage in financial transactions and business interactions. However, I'll also emphasize the power of credit when used responsibly. Credit is built on trust and reputation, but it's essential to understand that high-interest rates can become burdensome if not managed carefully.
Break free from the monthly salary trap: I'll explain to my child that relying solely on a monthly salary can create a dependency that hinders personal growth and limits opportunities for innovation and advancement. While a regular paycheck helps in organizing one's life, it's important not to become complacent. I want my child to develop an entrepreneurial mindset, to dare to explore new ideas, and to seek ways to grow beyond the boundaries of a fixed salary.
By teaching my child these financial secrets, I hope to provide them with the knowledge and skills to navigate the complexities of the financial world, make informed decisions, and build a prosperous future. It's about empowering them to have a healthy relationship with money and the confidence to create their own path to success.