After 36 years, I realised the importance of understanding money. Financial literacy is massively important.
This led to an obsession to get my house in order. My personal finance skills were embarrassing. Reading over 100 books in 2 years, things have improved. My financial literacy is improving everyday.
Reading books like Rich Dad Poor Dad (Robert Kiyosaki) has helped me understand money. It has helped me to fully understand assets, liabilities, income and expenses.
Kiyosaki and other notable personalities have a lot to say about the education system. This is based at America, but it is safe to say that the UK falls into this bracket. Among other issues, our kids are not taught how to manage money. Financial literacy was definitely not taught at St Peter’s in the late 90s.
This has to change. We have to go out and learn about money for ourselves. There are many ways to do this. Once you start focusing on financial literacy, you will find a way. Trust me. From someone who was terrible with personal finance, I have managed to improve my understanding.
If you understand money and are good with personal finances, you can spread the word: https://duffmoney.com/2020/09/18/spread-the-word/
We can teach our kids about money and encourage them to be little investors. From my personal experience, this is harder than it sounds.
Trying to teach the kids
Notice the sub-title – trying to teach the kids. One thing this horrendous pandemic has done, is give me a new appreciation for school teachers.
I do agree with the fact that the education system needs to change. Especially when it comes to learning about money. But that has nothing to do with teachers as they are given a syllabus to teach with.
During the 1st lockdown I was away in Oman for 12 weeks and Mrs Duffy had to work at home. She also had to do home schooling. Not only that, but she had me reminding her from Oman the importance of our kids’ education
When I got home, I realised how hard it was to home school. And I didn’t have any work on at the same time. This made me realise that my teaching skills were poor.
As well as home schooling, I have also been trying to teach our kids about money over the last 12 months: https://duffmoney.com/2020/05/22/what-to-teach-the-kids/
Inspired by Kiyosaki, I started to play Monopoly with the kids. I even made it part of their school day. My target was 1 game per week and that would turn them into little investors. Just to be transparent, we managed 2 games back in May 2020. They were just not interested. My kids were not feeling Monopoly and this little money lesson was a failure.
I tried a few things. Like the YouTube video I made them watch about concentration (Dandapani). Again, they weren’t too fussed. One of the kids even kicked a drink over as she was fidgeting. Disaster and not how I saw it playing out.
But I will find a way to turn them into investors. I have even set them up with Junior ISA’s. They both have Vanguard 100% share index funds. If you want to set up a Junior ISA, do some research. Don’t settle for the less than 1% you are guaranteed with the high street banks.
Trying to teach the kids … about compounding
99% of Warren Buffet’s net worth came after his 50th birthday; 97% came after he turned 65. This demonstrates the importance of time and the importance of compounding: collaborativefund.com/blog.
This demonstrates what compounding can do for your investing. If you can learn about compounding and teach your kids, you’re a better teacher than me.
My intention is to encourage my two kids to use their ISA and continue to invest: https://duffmoney.com/2020/02/14/long-term-investors/
If they become long-term investors, I am convinced they will have no money issues in their 30s and 40s. To change their mindset, I have a long way to go. To be fair to them, they are currently 12 and 9. I try and keep my money lessons to a minimum.
First-ever financial textbook
This leads me to the first-ever financial textbook introduced in UK schools.
Your Money Matters written by Martin Lewis was first released back in November 2018: https://www.moneysavingexpert.com/news/2020/07/martin-lewis-financial-education-textbook-rolled-out-to-700-scho/
This project initially cost £368,000 and was split between Martin Lewis and The Money and Pensions Service. It is a brilliant idea and the fact that the writer of the book is paying for the distribution to schools is awesome!
See below for a look at the chapters:
- Savings– ways to save, interest, money and mental health
- Making the most of your money – budgeting, keeping track of your budget, ways to pay, value for money, spending
- Borrowing – debt, APR, borrowing products, unmanageable debt
- After school, the world of work – student finance, apprenticeships, earnings, tax, pensions, benefits
- Risk and reward – investments, gambling, insurance
- Security and fraud – identify theft, online fraud, money mules
Just looking at the content I am certain that this will help kids in the UK turn into little investors. Guess what the Duffy girls will be reading.
From reading some of the reviews, it is mainly aimed at 14-16 year olds. I will maybe give them a few years before I start nudging them towards Your Money Matters.
If you have had stress or anxiety over money like me, look at helping your kids with a bit of knowledge. That’s if you have kids that is. If not, learn about money and tell people who have got kids how important financial literacy is.
Book of the week:
Rich Dad, Poor Dad, by Robert Kiyosaki. This is a brilliant book to improve your financial literacy. If kids in the UK read this book in secondary school, I feel it would have a massively positive impact on their lives.
For a hard copy visit the excellent Imagined Things Bookshop: https://imaginedthings.co.uk/