Think back to when you got your first job and that sweet taste of financial independence. Regardless of what age you started working, it’s unlikely you knew how to manage that first paycheck.
Let’s face it, our world isn’t particularly adept at teaching financial literacy to the younger generation.
I don’t know about you, but when I was in school, we learned trigonometry (SOH-CAH-TOA is still permanently etched in my brain), which has been helpful for all the times I’ve needed to solve the missing sides and angles of a right triangle, but not so much for managing my financial affairs as an adult.
It’s time we change that narrative by sparking open, honest discussions about money and giving our young adults the financial tools they need to flourish.
The Need for Open Discussions About Finance
Money talk has often been cloaked in secrecy, even considered taboo in some households. This needs to change.
Parents can play an integral role in setting their children up for financial success by fostering an environment where money conversations flow freely. Open dialogue demystifies the world of finance and empowers young adults to make informed decisions.
Using Positive Language
As we foster an environment of open discussions around money, it’s important to remember that the language we use significantly impacts the subconscious beliefs and attitudes our children will develop.
Just as negativity can breed fear and anxiety, positive language can cultivate a healthy relationship with money.
Instead of saying, “We can’t afford this,” try saying, “Let’s work out how we can save for this.” This small shift in dialogue encourages a mindset of abundance and possibility rather than scarcity. It helps young adults view financial challenges as opportunities for growth, aiding them in building a positive and proactive belief system around money.
Financial Goal Setting
Goals give us direction and purpose.
Whether saving for a first car, paying off a student loan, or investing in their first property, encouraging young adults to set and work towards financial goals from an early age is a great way to help them build discipline and a future focussed mindset.
It’s equally important to celebrate milestones, no matter how small. This positive reinforcement nurtures a sense of achievement and motivation, propelling them further on their financial journey.
The Essentials of Budgeting
Ever heard of the saying, “Failing to plan is planning to fail”?
That’s precisely why budgeting is so important. Budgeting is not about limiting yourself; it’s about making your money work for you.
The 50/30/20 rule, where 50% of your income goes towards needs, 30% towards wants, and 20% towards savings, is a great place to start for young adults because it’s simple and gets them in the habit of saving from an early age.
Understanding and Practicing Responsible Spending
Managing your money doesn’t mean you have to miss out on the things you enjoy. It’s all about responsible spending.
Need versus want is a timeless debate, but helping young adults to understand the difference is key.
Impulse spending is something that can often sabotage budgeting and saving efforts. A great tip for young adults to help them avoid impulse spending is to implement a 48-hour waiting period for non-essential spending. This allows time to consider whether the purchase is within their budget and aligned with their financial goals.
We’re not just equipping our young adults with financial knowledge but empowering them to build a successful financial future.
So, let’s keep the money conversations flowing and start helping our young adults build habits that will set them up for financial success. The narrative changes today!