We learn the first money lesson from our mothers, the most common one being “Don’t spend beyond your means”. That homemakers live by a strict budget and ensure that household expenses do not stretch beyond the income they are given to run their households. As youngsters, we were startled at how our mothers could save enough money even from a limited budget. That she would stash money at different locations that could come in handy during emergencies is still a miracle for most of us.
What we pay to learn from books in personal finance is something that our mothers had learned a lot ago from their mothers. So, how is it that most homemakers are so adept in savings, an essential element of personal finance? True that our older generation hardly invested in any financial instrument beyond fixed deposits, they still managed to set aside enough to pay for their children’s education, their marriage, a new house and retirement. Unlike us who allocate our money to separate investment options based on our financial goals, our mothers were clear about finances in their heads.
This Mother’s Day, let us look at important financial lessons that they inculcate in us from childhood. These proverbial lessons need no evidence to prove their validity and are easy to adopt and implement in our daily lives.
Never spend before you have it
Simply translated to “Never buy things on credit”. This is an apt lesson that today’s generation needs. The fact that many people carry multiple credit cards in their wallets and live their lives on credit is a financial disaster waiting to happen. While some amount of loan is necessary, for example, home loan, higher education, etc, building a life on debt is like waiting for your world to crumble under the impact of financial distress.
Spending is quick; earning is slow
Spending behaviour comes naturally to all of us. It is the earning capacity that is limited and, thereby, puts a limitation on all what we can spend on or what we must spend on. The difference between “needs” and “wants” stemmed from the understanding of what we must spend on rather than pay for anything that lends a feel-good factor.
Creditors will always remember you
If you want to know who loves and remembers you equally like your parents, try borrowing some money. The extent to which creditors will haggle you for the interest and then the principal amount will lend muscle to the common saying “Creditors have better memories than debtors”.
As much as we would like to forget our bad money decisions and would want our creditors to let go of us easily, that is not happening. Your loans will haunt you and will ensure that your identity does not drift away to obscurity till you have repaid the full amount.
Avoid debt at all costs
How many times have we seen our families living on frugal meals or spending only the bare minimum to avoid falling into debt? Remember when our grandmothers constantly nagged us saying that it is better to go to bed supperless than rising in debt. For the time being, you might feel compelled to pay for something that you badly want only to realize that you could have foregone it to avoid debt. After all, there is no pleasure in paying for something with borrowed money.
Save for a rainy day
This talks about having an emergency fund in place. Ignorance of what lies ahead underscores the need to be prepared for an unknown future. You never know when it would pour, which means be careful with your savings lest you need the money in the event of a sudden loss of income. Also, be prepared for possible major financial setbacks. Disaster can strike your life at any time. The more you save today, the faster you will be able to recover from misery and unfortunate events.