Money is one of the most important yet possibly most difficult subjects to approach with anyone, let alone younger generations. Now, as one of the biggest wage squeezes in history is taking place, it is essential that the future generation learns to handle their money effectively.
It could well be the case that in the near future, most people will not be able to rely on their parents (the ‘Bank of mum and Dad’) to cover their financial needs, so will need to be financially independent and look to other sources of finance where necessary such as an unsecured loan or credit card. Here are some of the aspects of managing finances which will be essential to teach future generations.
Debt is undoubtedly one of the most significant causes of stress in adult life, largely because people haven’t been taught how to handle it properly, and it is easy for it to spiral out of control. As such, teaching future generations about how debt works, how to manage it, and when to avoid getting into debt in the first place is often a great place to start.
Teaching them, for instance, that taking out a loan from any lender will cost them money, and that interest rates vary depending on the loan/provider, will surely help them to manage their debts more effectively in the future.
If the younger generations knew how to save their money effectively, and had spending plans/limits based on their income, then their finances would be healthy for life. They can start this habit early by receiving pocket money each week/month, which can help them to get a grounding in managing their own money.
Learning about investment, and how it can also generate a decent income over time, is also something which could greatly benefit future generations, and help them to avoid getting into debt in the first place. As such, it is well worth looking into the different ways to go about teaching younger people about this.
Learning how to effectively budget is another incredibly important (yet undervalued) skill which can help people to avoid getting into financial trouble further down the line. For such little time/effort, budgets can save people a huge amount of money in the long run.
By measuring income against expense, and setting limits accordingly (looking at variable expenses as well as fixed expenses), a budget can provide a basic outline as to how much money can be spent in any given time period. When stuck to, it is a fool proof way for young people to avoid debt and start building wealth, and is sure to help them be financially independent.
There is no doubting that future generations will have it tougher than their predecessors when it comes to finances, so learning these skills has never been more important. Whilst fairly simple in practice, these facets of financial management form the pillars of a healthy financial life, so the earlier they are learned and adopted, the more money they will save those who are applying them on a regular basis.