5 timeless wealth lessons to share with your children that aren’t really about money

If you’re offering money as a gift this holiday season, why not offer some pearls of wisdom too? Read 5 wealth lessons that apply to all aspects of life.

The holiday season is a time for families to get together and make memories. Sitting around a table swapping stories and wisdom is part of what this time of year is all about.

If you are planning to offer money to your young family members this christmas, you might wish to accompany these gifts with a little financial guidance too.

After all, bestowing wealth on the next generation is one thing, but teaching them how to manage it could help them gain more value from the money itself.

Once you begin to think about the most notable financial lessons you’ve learned over the years, you may realise that the principles of financial management apply to other areas of life too.

Here are five timeless wealth lessons to share with children that are not just about money.

1. Building something valuable takes time

The age of mass media has brought many positives to our lives, but one potential negative consequence is that young people may feel success needs to happen overnight.

In actual fact, building a pot of wealth that you and your family can rely on takes years – decades, even – to accomplish.

What’s more, it’s the “boring” bits that can make a huge difference; pension contributions, timely credit card repayments, and disciplined monthly saving can all add up to long-term financial success.

But of course, this is not just true for money. Laying a strong foundation takes time in any aspect of life, be it building a business, career, marriage, or family.

As such, learning to apply this lesson not just to their finances, but to life in general, could put your children in good stead for the future.

2. Living beyond your means could create problems later on

As a parent or grandparent, ensuring the next generations are financially savvy may be extremely important to you. As such, one vital lesson they should learn early in life is that living within your means is a good idea.

There is nothing wrong with sensible borrowing, such as taking on an affordable mortgage or student loans. However, regularly spending more than you earn can create debt problems that increase financial stress and prevent you from reaching your goals.

Once again, this lesson goes beyond money. Taking more than you’re giving in any situation, especially where work and relationships are concerned, could be an unwise habit to adopt.

When you’re offering wealth to the next generation this Christmas and beyond, ensure the recipient knows the importance of living within their means – in all aspects of life.

3. You can’t reliably time the market. It’s time in the market that counts

One of the golden rules that successful investors often follow is that it’s time in the market, not timing the market, that could yield the result you want.

As we explore in our insights on long-term investing, holding investments for a period of decades could be a more successful strategy than constantly buying and selling in an attempt to time things “just right”.

This couldn’t be truer in life, either. While we are often sold stories of “overnight success” from entrepreneurs and celebrities, these tales usually omit the years of hard work, long hours, and rejection these individuals faced.

The “time in the market” rule is extremely useful when teaching young people the basic principles of investing. In a wider context, it may also be helpful to remind them that to become successful at anything, you need to spend a long time doing it.

Whether they’re starting a new job, learning a new sport or skill, or navigating the responsibilities of young adult life, your loved ones may be comforted to learn that these things become easier to manage with time.

4. Marginal gains can make all the difference

In a famous case of sporting genius, one GB cycling coach revolutionised his team’s success through one simple strategy: he improved every aspect of their performance by just 1%.

In just five years, Sir David Brailsford took the team from having only one gold medal since 1908, and no Tour de France wins, to winning 60% of the available gold medals at the 2008 Beijing Olympics.

This feat of brilliance is just one example of the impact of marginal gains. Gains of under 5% might seem meagre at first glance, but when applied to a growing investment portfolio or savings account, these returns could help your young family members see significant returns over the years.

And, as Sir David Brailsford demonstrated with the GB cycling team, underestimating marginal gains across the other areas of your life could be a mistake.

Apply the 1% rule to health and wellness or job performance, and your children and grandchildren may realise that over time, small improvements can be responsible for enormous shifts.

5. It’s okay to make mistakes, as long as you learn from them

Many people feel they should hide their mistakes from their children. However, while your past is yours alone to share, it could bring the next generation some peace of mind to learn that you didn’t always have everything figured out.

Indeed, everyone can think of at least one financial mistake they have made. Perhaps you took out a loan that seemed affordable at the time, but turned out to be hard on your finances. Or, as a number of people did at the start of the pandemic, you panic-sold investments that you could have held onto.

Learning that financial mistakes are inevitable could help your children to seek your advice when they happen, rather than keeping these “failings” to themselves.

Passing on this wisdom could aid your loved ones’ recovery from other errors too, be it in relationships or at work.

Get in touch

We are here to discuss the financial fundamentals with you and your family. Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

 

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