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One of the many labels you could plonk on my parents is “hippies”.
It’s not just their home-grown organic food, the solar-powered house, or their constant rewatching of British 70s sitcom, “The Good Life”. And they’re not dastardly annoying hippies, like Neil from “The Young Ones”.
But new-age hippies they certainly are.
More than anything, I think it’s their attitude of self-sufficiency. What they grow but don’t eat themselves – including electricity to sell back to the grid – they exchange with the neighbours in their 21st century hippy commune. Their 50-odd chooks provide the free-range eggs that are their bartering currency.
Standing on their own has always been important to them and something they taught me. Everything tastes sweeter when you’ve earned/bought it yourself. Pride and achievement.
It partly meant that I had my first real job, under the golden arches, soon after my 15th birthday. At one stage as a teenager, I held down five jobs concurrently. Three at fast food joints, others as a typist and labourer.
The Hippies didn’t buy me my first car. They didn’t pay my HECS fees. There was no trust account bequeathed to me to squander backpacking around Europe when I turned 21.
I put myself through university living out of home. They did buy my textbooks, and welcome me home every week for Sunday night family roasts.
They did try to put money in a bank account for me, via the Commonwealth bank school accounts, when I was in primary school. But the great journalists’ strike of 1980 meant financially hard times. And that account got cleaned out.
Hippy Mum also gently encouraged me into the stockmarket. Shame her first stock tip, blue sky miner CSR, turned out to be a complete dud. But therein, another lesson. Diversification. Should have bought an index fund!
And there were unexpected gifts – they sold me one of their cars for a pittance and when Mrs DebtMan and I bought our first home, they were there to help out.
The point is … every parent wants their kids to get off to a solid financial start in adulthood. And the Hippies were no different.
But there are numerous ways of giving your children the best. All of which, done properly, can give the midgets a huge leg up financially in life.
For my parents, it wasn’t about handouts or funding massive expenses. It was the financial attitudes and outlooks that were equally, arguably more, valuable.
Will I do anything different? Will I teach DebtBoy and DebtGirl the same lessons my parents taught me? Or will I soften and hand them stuff on a plate?
It’s not completely up to me. We must not forget the powerful Mrs DebtMan. And the lessons her own parents taught her, and what they sacrificed for their kids, were completely different.
So, what will the DebtKids be taught as they become to understand money?
Delayed gratification. You don’t have to have everything now. You cannot create wealth without first not spending all of your money (ie, saving).
Never spend more than you earn. Pay yourself first. Put away 10 per cent of your income into the “Future You” investment account. Allow it grow. It will provide the unearned income of your future.
Understand investment risk and timelines. Share and property markets are volatile. But if your investment horizon is long enough, they’re hard to beat. And a part of every investment plan should be ultra-long term.
It all starts with pocket money. Receiving it. Understanding that there are strings attached (household chores). Learning it’s okay to spend some now, but that you must save some for later.
When they’re a little bit older, that a home is the cornerstone of wealth creation. Building equity in your first home will later allow you to expand your investments.
But are you wondering how to fund the little blighters in the meantime? How to fund their education?
You save. You invest. From as early as you possibly can. Preferably from before they’re born. The more expensive the school fees, the more you need to prepare.
But most importantly, kids will learn by osmosis. You want to give your kids the best financial start in life? Pitch yourselves as the best example.
It’s hard to teach what you don’t know. So, live the lessons you want to teach them.
Bruce Brammall is the author of Mortgages Made Easy and managing director of Bruce Brammall Financial. E: bruce@brucebrammallfinancial.com.au.