Many people await the words of professional advisors for advice to direct our financial decisions. What we may not appreciate is the great source of advice that has been available all along, much closer to home. That would, of course, be our mothers.
Mom may not be a money mover or shaker, but that doesn’t mean her advice is any less important to your financial success. Mothers tend to be nurturers and protectors and their advice to their children tends to reflect this nature. Much of their guidance has been passed through many generations and stands the test of time.
Moms are on the front lines of doling out allowances and shaping their children’s money habits. There aren’t many more important skills a parent can teach than managing money. Mom’s money talk is more about we should handle our time and money and what opportunities they can create. These are lifelong skills that will serve you well in all areas of your life. In honour of Mother’s Day, let’s review some of our favorite lessons from moms:
Save for a rainy day
Mom knew all too well that there are both good and challenging times for her family. That rainy day could come in the form of a job loss or an unexpected medical bill. Unless prepared for it, a surprise expense can be devastating to the most carefully laid financial plans. A good rule of thumb is to have three to six months living expenses in your emergency fund.
Know how you’re spending your money
Create a budget to track what’s coming in and what’s going out. It’s one of the best ways to identify areas where you can save money.
There’s a difference between need and want
Anytime you go to make a purchase, ask yourself is that a need or a want? And if it’s a want, is what you’re paying for it worth it?
Avoid impulse purchases
Sales are great, but often lead to impulse purchases. If it’s something you didn’t even realize you needed or wanted, chances are you’ll regret buying it and you’ll have wasted your hard-earned cash.
Don’t put all your eggs in one basket
This is one of the most basic and practical investment approaches proven over time. Diversification is great way to spread out the risk of any one company or sector falling on hard times and taking your nest egg with it.
Life is short
Every mother knows how quickly the years fly by as her children grow and move on with their lives. No matter how far you may be from your kids going to university or from your retirement years, your future will be here in the blink of an eye. Planning ahead sets a good example for your kids and helps you responsibly prepare for your own future.
Live below your means
This is also referred to as not trying to keep up with the Jones. Mom knew that spending every penny you make, or even worse, taking on debt to support a lifestyle, would result in future financial difficulties. Here’s a simple Mom-approved rule: spend 50% of your income on needs, 30% on wants, and save the last 20%.
Don’t spend money you don’t have
Use your credit card wisely and with discipline to ensure that you don’t dig yourself deep into debt. It takes a lot longer to get out of debt than it does to get into it.
If it sounds too good to be true, then it probably is
Don’t get scammed or tricked into spending money. Ask a lot of questions, and remember if it sounds too good to be true, it probably is.
Start saving early
Start saving early, especially for retirement because interest compounds and can really affect how much your little nest egg grows.
Be a huge proponent of comparison shopping. Whether it’s for groceries or car insurance, there’s money to be saved simply by shopping around. Think of price-matching. We often do it for sales at the grocery stores to get the best deals, but too often we overlook that all it takes is a few minutes on the computer to find a better price for things like computers or smart phones.
Every time you left your house on your bike, or later in a car, Mom would always warn you to take care. This warning is even more important when venturing out into the arena of financial advice. Be sure that the advisor with whom you trust your financial future has real experience and credentials and is available to sit down with you face-to-face in a place you are comfortable with.
Wear clean underwear
You never know when you might be in an accident. This was Mom’s way of telling you to be ready for the unexpected. Various types of insurance allow you to pay an insurance company to take on a risk to protect you and your loved ones. Life insurance is a great example of this. If needed, you should get the right type of coverage for you. For most consumers a simple, inexpensive term policy is the best bet.
Mother’s Day is one of our most cherished family holidays. If you are lucky enough to still have your Mom with you, give her a big hug for everything she has done, and continues to do, for you. At the same time, this is a great opportunity to thank her for all the wisdom she has imparted to you over the years. The best gift you can give her is the knowledge that you actually listened to her advice and are better for it. Its your way of showing her that your Keeping Life Current.