The last think we thought about when we kids was saving moving. For the majority of us, that was the farthest thing from our mind. Why was that? The most of us learned money from our parents as money is not taught in school. Like most parents, my parents never talked about money at the dinner table. In fact, my parents never invested a single cent in their lives. When I was growing up, my father worked in the coal mines and my mother was a stay at home mom. Both of my parents struggle with money nowadays.
I think parents who do not teach their kids about money at an early age these days are putting their kids at a huge disadvantage in the future. With the cost of tuition these days increasing greater than the rate of inflation, the cost of tuition in going to be astronomical by the time a kid turns 18. Tuition is not going up that high? Well, the tuition is going up for a variety of reasons. Faculty strikes at universities use to be rare. I remember being at Dalhousie University in Halifax, and the teachers went on strikes like 3 weeks before final exams. So all classes were cancelled in most cases. One of my professors actually taught during the strike. This prof told us, "You guys are paying for this course, so I do think it is right that you miss out on material". The strike ended a few days before end of classes and prior to the start of final exams.
A lot of parents these days have given allowances to their kids growing up. Almost all kids would spend this on junkfood and on entertainment in their teens. A lot of teenagers try to find jobs while in secordary school or high school. Most of the time the teenagers blow their money on having fun. A parent needs to show their kids that there are more ways to make money than a job. My parents generation consisted of the father working and the mother staying home to take care of the kids and the house. Nowadays, almost 99% if the time involve both parents NEEDING to work for the family to make ends meet.
Parents need to lead by example. A lot of people have heard of the book called
"The Richest Man in Babylon" by George Clason. One of the lessons in this book is to pay yourself first at minimum 10% whatever income you earn. This payment should occur before your pay your mortgage or rent, buy groceries, etc. Often pay try to pay themselves last. The thing with paying yourself last, is more often than not, there is no money left at the end of the month. Also, people are under the impression that if they buy a coffee or eat out, that they are treating themselves. When you do these activities you are actually paying the coffee shop or the restaurant and not yourself.
A person's reaction is a phrase such as, " I have bills that must be paid!!" . Paying bills is important. If you do not pay yourself first, then you will never get ahead. It is often noted that 70% of americans are living paycheck to paycheck. When you start of paying yourself at minimum 10%, the money will not grow by much at the beginning. But your money will start to work for you. Then you can use this money along with the money you deposit to make more money. Albert Einstein has stated, "The eighth wonder of the world is compound interest"
Some people have said that you do not make any money when you do not pay yourself first. Think of it this way. What percentage of income per hour to you think you are worth when working at your job?
How Does This Work For Kids
Kids are not allowed to work at jobs in Canada unless they fall under the exceptions. Kids can work in a family owned business or they can start a business at any age. If the kids received money on their birthdays or special occasions, then the parents should help them decide what to with that money. A portion of the money should go to savings, investing and charity or tithing. This will instill good habits in their kids.
For our generation and all future generations, the days of job security are over. No matter what type of work that you do, the job "at the factory from age 18 to age 65" does not exist anymore.
See, a person can increase their income by other means besides a job. Paying Yourself First allows for building an emergency fund, start a business, or investing account. Your income is the main wealth builder in your life. Not only does job security not exist anymore, but an individual is almost 99% guaranteed to be responsible for their own retirement. Years ago, companies had defined benefit pensions for their employees. The companies, for the most part, have done away with the defined benefit pensions at is cost them so much money. The employee would receive a pension check until they die. Nowadays, a person needs to think about retirement at a very young age. You have to make better choices on how and who you spend your time with while going through life.
If you have money coming besides the money from working at a job, you will be better able to navigate the storm due to a job loss. A lot of people will not even touch the money generated through a side hustle or investing. This allows the money to compound faster and possibly become financially independent well before the normal age of retirement.
More Reasons To Pay Yourself First?
There are tonnes of benefits of paying yourself first. One of the major benefits is the ability to sleep better a night. You will be able to sleep better at night as your are more financially stable. Just think about a time when you were flat broke and had no choice to go to a job that you hate.
Money is actually the major reason for divorces and fights in marriages and relationships. People often say money is not important to them and they are not interested in money. Every thing in life has money involved in it somehow. Having less money leads to stress. If a couple has a well funded emergency plan and live within there means, they are often less stressed and happy in the relationship. An emergency is going to happen when you least expect it. A emergency could be car breaking down, furnace breaking down, a sudden job loss or an illness.
Conclusion:
Paying yourself first is essential to you own financial well being. Losing a job can be tough and there is a lot more people competing with you for the exact same new job you are looking forward. Our parents generation had it rather easy compared to our generation. In Canada, we have people with a degree or two, that are struggling to find a job.
Money is not the most important thing in life. Money is a tool that will help you in all areas of your life. You can not put a price on having piece of mind. Some people are so stressed out that they HAVE to go away on vacation. Would the vacation be more enjoyable and relaxing if you did not put in a credit card that can not be paided in full prior to interest changes being applied?
While paying yourself first and you still come up short, take it as a sign. The sign would to do something to increase your income and/or reduce your expenses. This might be a side hustle, a second job, another job or working overtime.
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.
Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.
