Having one, making it clear, telling your kids all about it, and sticking to it.
A financial philosophy is both how you think about money, and what guides your decision making. It's the knowledge, attitudes and values about money you’ve gathered from the sum of all your experiences. Some of it might be well thought out, some of it might be hidden from view,, and some of it might be the scars from the small (or large!) mistakes we (or our own parents) made along the way - all those little whoopsies and wins add up. Either way, we think it’s something to talk about here, and with our kids at home. Because, let’s face it…we often need something to guide us - we’re not perfect and we have lapses of judgement too - and our kids see EVERYTHING! So making a clear financial philosophy helps us, and helps us teach our kids too. So, as you’re setting up your kids in NZ’s first tailored youth accounts, have a think about the following:
Name it, Do it.
Start by grabbing a glass of wine or a cup of tea, talk it out and write it down, making it as clear and simple as you can (after all, you’ll be saying it a thousand times). Then, when the philosophy is in action (paying the bills, deciding between ice cream and ice blocks, buying Xmas presents…whatever), say it out loud and live it with our kids. Pretty much that’s it. “What I say is what I do, and this is why…”.
I am, We are.
Personality comes into it too. One parent’s personality might be frugal and careful, and the other one might go all out on big gifts at birthdays, generous to a fault. Your family too can have a ‘personality’. This is the “this is what we do around here” mantra. This sort of language means our kids get a sense of who they are too, and why it matters.
Own it, Learn from it.
Everyone makes mistakes. Talk about it. Be open. We let our kids see how we deal with it, learn from it, and make different decisions in the future. Also when we’ve done something great too. We reward ourselves and let our kids share the goods too. “The ice creams are on me, ‘cos I reached my savings goal for our summer holiday trip!”.
Here’s our list - the SquareOne Financial Philosophy