Most of us have distinctly middle class roots. Father main bread winner working with the same company for many years, stay at home mother with an envelope system of budgeting, dining out only on special occasions, typical investments of LIC, Fixed deposits and gold, vacation means visiting grandparents –money was certainly not plentiful, every spend had to be weighed and debated and therefore there was varying degrees of frugality that we were all exposed to.
The result of this childhood is that most of us tend to overspend now to compensate for a lack during our childhood. Whether it is the grandness of our houses, the multiplicity of gadgets and cars, the number of holidays and outings, we all spend much more than what our parents did on various things and the difference is not just inflation.
What is important to understand is that the opposite of this lack of material comfort or depravity during childhood is financial security and stability but not plentiful material comfort leading to debt!
Financial wisdom and discipline certainly need to be exercised and it doesn’t mean you have to live frugally.
Further a very dangerous effect of this over spending or spending recklessly is that your children will grow up spoiled and not wanting for anything – especially where you want to provide them with all that you didn’t have when you were growing up. While the sentiment behind this attitude is understandable, it is detrimental to your children. They need to understand and practice discipline if they have to have financially secure lives when they grow up.
Fear of the stock market is another remnant of the childhood that most of us carry. Our parents viewed stock market as very risky, only for businessmen and LIC, FDs and bonds besides gold and real estate were the only investment vehicles. While none of these beliefs are wrong, one truth not known by them is that equity – stocks and mutual funds is a very good way of growing long term wealth.
Money has always been an uncomfortable topic. Seldom would your parents talk about it, or discuss it. In fact it was impolite and crass to do so, especially if you are a girl or woman. All this leading to most of us being ignorant about money, investing, retirement or financial planning.
But all is not lost, even if you realise these issues and take corrective action, a secure financial future for you and your children, based on awareness and knowledge is not difficult to achieve.
The author-Lovaii Navlakhi, CFP is the CEO of International Money Matters and The Financial Alphabet