We often become what we repeatedly do because we are creatures of habit, and usually the best way to form a habit is to start early.
In a book I once read, Secrets of the Millionaire Mind, there’s a story about a successful professional who makes a six-figure salary and lives in a nice house with expensive cars. But for some reason he never has any savings. Despite his high income he’s always in debt. His net worth is negative, his investments tend to under perform, and he’s living paycheque to paycheque. The root of his financial struggle lies in his childhood. When he was growing up his parents were poor. They resented rich people, and blamed economic inequality and other social problems on money. Growing up in a household where money was considered bad and corrupt gave him the notion that having a money is bad. As an adult being wealthy would give him a sense of guilt. So whenever he makes money he would subconsciously try to spend it all. Many people lack the skills to take care of their own money because they were either never given the proper management tools to begin with, or were simply misinformed. By not forming good financial habits at an early age consumers might have a hard time getting out of debt when they become adults.
A recent survey by Consolidated Credit, a non-profit credit counselling service, shows that roughly a third of consumers had to turn to family or friends for financial help at one point.
Not surprisingly the biggest challenge for many when facing financial hardship is being unable to pay for housing.
Becoming financially literate.
The way to tackle financial literacy can be done on two fronts. At home parents need to make financial education a priority in their household. At school there should be a full length course for basic personal finance. Children have to learn to work with money instead of being afraid of it or being told that money will lead to problems. The lack of knowledge is usually what leads to economic problems later on in life. It’s important to instill in children responsible spending habits and budgeting skills from an early age. As Aristotle once said, “Good habits formed at youth make all the difference.”
Random Useless Fact:
Some 40% of Canadian families carry an outstanding balance on their credit cards, with a median amount of roughly $3,000.