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Fellow daddies, is it important to learn finance basics? Most of us would nod our heads and say yes.
But do we really mean it? A survey begs to disagree.
Standard and Poor’s, a financial services company, conducted a Global Financial Literacy Survey.
The result?
Only 35% of adult males worldwide are financially literate.
If you’re curious how our wives fare, they’re even behind by 5%. Only 30% of females know finance.
What does this mean?
One, we have the potential to lead an economically unstable home.
Two, we may raise financially irresponsible kids.
The goal of this essay is to encourage parents to take the step to at least learn the basics.
Here are 8 undeniable reasons why fathers should learn finance basics:
1. Financial education is not taught in school.
Academic qualifications are important and so is financial education. They’re both important and schools are forgetting one of them.
Robert Kiyosaki, founder of the Rich Dad Company.
We may have diplomas, yet there’s a good chance we’re still financially illiterate. Why? It’s because schools do not teach about money.
Here are the reasons why schools don’t have a financial education according to Time.com:
– Not enough qualified instructors.
Only one in five teachers feel qualified to lead a personal finance class.
– Personal finance concepts are not standardized.
If concepts are not tested, it can’t be taught.
– Lacks clarity.
There is no governing body to mandate personal finance classes. Each state has its own ideas on how to go about it. As a result, there’s no clear agreement on what kind of method works.
Related: 9 Good Financial Management Ebook Worthy Of Your Time and Money
2. Kids Emulate Their Parents.
A father’s influence will last a lifetime.
Based on a study, parents who are financially responsible are more likely to have kids who:
- discuss money with them. (83% vs 66%)
- practice delayed gratification. (52% vs 40%)
- are honest with their spending. (43% vs 34%)
3. A Good Man Leaves an Inheritance.
Proverbs 13:22 says, “A good man leaves an inheritance to his children’s children.”
While inheritance is not limited to money, it’s nice to leave something tangible to them.
Yet, what’s the use of material inheritance if our children don’t know how to manage them? What we leave might do more harm than good to them.
Teaching our kids how to handle money will go a long way. It ensures the next generation to be better stewards of God’s blessings for God’s glory.
Jackie Chan, yes THE Jackie Chan, said he won’t leave a monetary inheritance to his son, Jaycee.
In case you didn’t hear about it, he says, “If he (Jaycee) is capable, he can make his own money. If he is not, then he will just be wasting my money.”
Let’s train our children to be capable of inheritance.
4. Protects our family from scam.
There are predators out there who are always ready to pounce on the ignorant. Financial literacy is a weapon against those wild animals.
Did you know that if we make 15% a year from our investments, we are already making excellent money?
To put this in perspective, credit card companies are already killing us with their 36%-42% interest a year.
So if some predator comes to us and says he can triple our money in three to six months, we already know it’s a scam. Runaway!
Another red flag to watch out for is the word “Guarantee.” There are no guarantees. We all play with risks.
Here’s the truth:
High-risk, high-return = Aggressive Investor
Low-risk, low return = Conservative Investor
Low-risk, high-return = Scammed Investor
High-risk, low-return = Foolish Investor
The more we learn finance basics, the better we protect our family from scams.
Be fearful when everyone is greedy. Be greedy when everyone is fearful.
Warren Buffet
5. Helps us make sound decisions for the family.
Having a budget will make us a better decision-maker. It helps us decide based on facts; not with what we feel. How much money do I have? Can I afford that? Is that a need or a want? Which one is more important?
I remember early in our marriage Lalaine and I used to go to this chicken place regularly. Each night we share a cup of rice plus a half-chicken. You might mistake it as our favorite restaurant. Because the reality is, it’s the only quality food we can afford.
Without a clear budget, our buddy Visa might easily drive us to steakhouses instead.
We now enjoy the fruit of our discipline as we have saved enough to move out of our parents’ house. We’re happy to finally leave and cleave, but it requires another level of budgeting.
6. Makes us a smart buyer.
Case study:
You have the money, which one will you buy: Car or Property?
If you answered property, generally you are a smart buyer. Why? Because the property is an asset, while the car is a liability.
The property will maintain or even increase its value over time. While the brand new car immediately loses 15%-20% of its value after you drove it off the dealer.
Let’s see another case.
It’s on sale, which do you buy: branded shirt or toothpaste?
If you chose toothpaste, again, you generally are a smart buyer. Toothpaste is a need. You brush your teeth daily (unless you don’t). What you saved on needs are REAL savings.
The branded shirt, in contrast, is a want. You can buy an equally comfortable shirt at a much lower price; without the logo.
7. Prevent Debts (Or helps us get out of it).
Another reason why my wife and I eat at the chicken place each night: We’re buried in credit card debts.
It was the result of a lack of self-control and financial illiteracy. We thought the 3% monthly interest from credit card companies is a small price to pay to get what we want.
Our ignorance created a monster in our life.
We prayed, seek guidance, and made a decision to pay off those cards. We were led to books, podcasts, and seminars on financial education.
Little by little, we applied what we learned and paid off eight credit cards in the process.
8. We interact with money every day.
Question: Will you allow your untrained child to drive your car?
I hope your answer is no.
The same is true with money. Both cars and money are useful, but they have the potential to harm us when we don’t know how to handle them.
Based on the survey earlier by Standard and Poor’s, only the minority of us should be allowed to handle money. Yet in reality, most – if not all of us – deal with money every day.
Closing Thoughts on why we should learn finance basics
Vince Shorb, CEO of National Finance Educators Council, sums it well.
Parents, if you don’t teach personal finance lessons to your kids, they likely will never receive any financial education.
It’s your responsibility to ensure they are ready to leave your home with skills, behaviors, and systems that will help them be self-sufficient members of society. And avoid the pain associated with money struggles.
I hope I’ve listed enough reasons for us to take action. It’s imperative for parents to at least learn finance basics.
Where to Start?
Not sure where to begin your financial learning journey?
Books are always a good place to start.
Check out my compilation of excellent financial management ebooks. These are the books that helped me and my family get back on track financially. You don’t want to miss these gems.
“An investment in knowledge pays the best interest.”
– Benjamin Franklin
Thank you so much for reading! I hope this essay will help you jump-start your financial learning journey.
Godspeed!
