Probably the biggest failing of our school education is the complete lack of learning any significant financial skills.
I recently learned a very basic tactic which every school kid should learn before they are 16. It is very simple and is fundamental to a great future.
As soon as we start to earn any kind of income, there are many societal factors that tempt us to part with our hard earnt money.
Whether its trendy clothes, the latest games or gadgets, a nice holiday or a you-beaute car. There is always something.
And most people spend most, if not all, of what they earn. I was certainly one of them.
But from reading a Tony Robbins book about finance, he stated what was to me, a fantastic concept.
Of all of the money that you earn a month, first keep 10% for yourself and invest it. This is known as ‘paying yourself first’.
By following that habit, it will have 2 major positive effects on your life as you get older.
Firstly, you will spend less and be more mindful of your finances. This will encourage you not to waste your hard-earnt.
Secondly, and most importantly, the money you invest will accumulate and with the power of compounding and reinvesting the income generated, it will soon get to a substantial sum of money.
As you reach your later years, you will probably become pretty financially astute as you investigate different investment opportunities.
And the main goal is to get your nest egg to a size where you can use it to generate passive income for the rest of your life.
You do not have to work anymore. You get to work if you so choose, but there is a huge psychological difference between ‘having to’ and ‘getting to’.
And how does this all start?
By getting into the habit of saving a percentage of your income and becoming more financially savvy.
That is why I decided to teach my girls this habit at their relatively young ages (8 and 10). This habit will serve them for the rest of their lives.
As they are young and do not really spend anything, I have started them at paying themselves 20% of all income and writing it in a journal or log.
If they continue this habit religiously and educate themselves financially, there is no reason why they can’t generate their financial freedom by the time they are 40 or so.
I certainly wish that I had been taught that at an early age. My life would be very different now.
My kids now journal any money that they get, from pocket money, tuck shop money, birthday money, …any kind of income, to get them into the habit.
For now, they will put their investment money into their savings account. The financial education will come later.
But getting them into this positive habit while they are young will have a dramatic positive effect on their financial situation throughout the rest of their lives.
Dream big and take action 👍
Scott 😃
Scott Lane – Founder BuildMyLifestyle
Digital Entrepreneur and Lifestyle Coach
SFM Elite+ / DEA Mastermind Experience Member
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