Families mean a lot. They are there for us both in good and bad days. Our family members also play a significant role in making us the kind of person that we are today.
I was fortunate enough to grow in a household where the money is not a taboo subject, and we openly discussed it. On this Father’s Day, I would love to share some of the money lessons that I have imbibed from my family members.
Moneymaking is an art
My grandmother, a former professor of philosophy, have never invested in equities or mutual funds, but she did know how to save money and make money work for her. “Earning money is easy; saving money is hard. It does not matter if you earn Rs.1,000 or Rs.1 crore, you need to save. Moneymaking is an art,” she says. Saving money is a habit, and it has nothing to do with how much you earn. To teach the habit of saving, she opened a recurring account of Rs.2,000. She told us that a recurring account is the first step towards financial discipline.
Save money for your emergencies
She also says that one cannot rely on others during emergencies and being prepared for emergencies is always the best option. This meant that one should have enough savings in their savings account or other liquid investments that can be used during emergencies. It is THE fundamental basic of financial planning.
Having an emergency fund is essential. Emergency funds are only for emergencies, and an impromptu trip with your friends to Goa is not an emergency. Emergencies include job loss, small accidents etc.
What my grandmother didn’t teach us is having at least three months’ worth of expenses in highly liquid products such as a savings account or liquid fund.
Don’t be penny wise and pound foolish
My grandfather was a humble professor of Mathematics and was a man of few words. He never really talked about money. However, just once I heard him say ‘Penny wise and pound foolish’ as a passing remark. He did not elaborate, and I understood what he meant.
Many times, we tend to go for the cheapest available option and overlook the bigger picture. The classic example in today’s generation is the SALE craze. Ads and banners scream ‘buy 3 get 1 free’, ‘shop for Rs.5,000 and get a voucher worth Rs.500’. It is well and good if you were already planning to buy three shirts or shop for Rs.5,000, but if not, you are just being MANIPULATED. These ads tempt us but what we don’t realise is that we have to buy two shirts worth Rs.1,000 to save Rs.1,000.
Buying cheap clothes and shoes that would need frequent replacements is also a waste of money. It is better to invest in a good pair of shoes and clothes that will go well with everything instead of having 20 pairs of footwear that will go with different attires. But if that makes you happy, by all means, go ahead.
If you do not have, then don’t borrow it
Another classic financial lesson from my grandmother is living within means. ‘If you do not have salt, then make your meal without salt. Don’t borrow from your neighbour,’ she says. It is just a small example, but there is a powerful message behind it.
It is hard to follow this principle in today’s age of credit cards, instant personal loans and zero per cent EMIs. While credit cards and personal loans can be useful during emergencies but if you use it for lavish expenditures and you are not careful with your expenses, you will soon be in a trap.
Never have a single source of income:
My grandmother advocates having at least two sources of revenue. It is crucial especially in this fast-changing world where many skills are becoming obsolete very fast. However, one needs to take a risk and work hard to have multiple sources of income. For my grandparents, having a second source of income meant having rental income. Today, there are many ways to have various sources of revenue. It can be through freelancing, taking up a part-time job, investing in direct stocks or lending through P2P lending platforms etc.
Many families don’t talk about money or their monetary situations. Financial literacy is not taught in our schools and colleges, and hence, it is essential that the seniors in the family teach money lessons to their kids.
These were the top 5 money lessons that I got from my family members. What are money lessons have you received from your family members? Let me know in the comments below.