The price of long-term returns is volatility, living below capacity is the most powerful financial leverage
On June 3, 2019, my wife and I welcomed the birth of our daughter. She is still young, mainly focusing on eating and sleeping, one day has not changed much.
One day, however, she will need advice about money and life. As a father who has spent most of his career researching and writing about money, behavioral finance, and business, this is what I will tell my daughter.
1. Don’t underestimate the role of luck in life
It’s easy to assume that wealth and poverty are our choices, just as it’s easy to underestimate the role luck plays in life.
Family, values, country, and the generation we are born into, as well as the people we meet along the way, all play a role in shaping our lives. You should believe in the value and rewards of hard work. However, it is also important to understand that not all success is the result of hard work and not all poverty is due to laziness. Keep this in mind when forming opinions about others, including yourself.
2. Have control over your life
Being able to do what you want with whoever you love at the right time will bring a level of lasting happiness that no luxury item can provide. The thrill of acquiring tangible products often wears off quickly.
On the other hand, a job that makes them happy to do it will always be there. Having enough savings to give your child choice and safety even in emergencies never gets old. Being able to retire as soon as you want is a privilege.
Achieving independence is our ultimate goal in life. But independence is not “all or nothing” – every penny saved is like “buying” a piece of future equity. Accumulating gradually, you will achieve what you want, whether in finance or in life.
3. Don’t count spoilers
No one can appreciate the value of a coin without experiencing a feeling of need. Although the family is always ready to help you especially financially, I will not let you misunderstand the meaning of money.
Learning to understand that your child cannot have everything he or she wants is the only way to understand the concepts of “necessities” and “wants”. This is a stepping stone for your child to learn about budgeting, saving, and re-evaluating what he already has. Knowing how to be frugal – without being stingy or forgetting about your needs – is an essential life skill that will come in handy during life’s inevitable ups and downs.
4. Success doesn’t always come from big actions
Napoleon’s definition of a genius is a person “Can do normal things when everyone around is losing their minds”. Money management also. You don’t need to do something like “one minute of glory and then out”, instead do everything consistently and continuously. Avoiding catastrophic mistakes (the biggest of which is burying your head in debt) is more powerful than any fancy financial trick.
5. Living below means
Living below means is one of the most powerful financial levers. Because then, you will have control over other financial factors such as income or investment returns.
The person who earns $50,000 per year, but only needs $40,000 to be happy, will be richer than the person who earns $150,000 but needs $151,000 to be happy. An investor who earns 5% profit, but low cost, may be better than investor who earns 7% a year, but needs every penny of profit to make a living.
How much you earn does not determine how much you have. At the same time, how much you have does not determine how much you need.
6. It’s okay to change your mind
Hardly anyone can define what their whole life will be like at the age of 18. So it won’t be the end of the world if you choose a major that you end up not liking. Or get a degree in a field you’re not passionate about. Or stick with one job for a long time and then decide you want to do something else.
Children need to recognize the value they receive in the process of learning even if it is not according to their own wishes in order to develop more. Forgiving yourself for changing your mind is a superpower, especially when you’re young.
7. Everything has its price
The price of a busy career is not having much time for friends and family. The price of long-term market returns is uncertain and volatile. The price of naughty children is that they have to live an unprotected life.
Everything worthwhile comes with a price tag, and most of those numbers are hidden. Once they accept that, they should begin to treat things like time, relationships, autonomy, and creativity as valuable currencies.
8. Money is not the greatest measure of success
Warren Buffett Once said: Real success in life is “the number of people who truly love you among those whom you expect to receive love”.
And that love comes mainly from the way you treat people, rather than from your possessions. Money won’t provide what you (and almost everyone else) want most. No amount of money can make up for a lack of character, honesty, and genuine empathy for others.
This is the most important financial advice I can give you.
9. Don’t blindly accept any advice your child receives
All the lessons here, including this last one, are things most people learn too late in life. Your child’s world will be completely different from mine, just as the way I live will be completely different from your grandparents. No one is exactly the same, and no one has all the right answers. Never take anyone’s advice without distinguishing it from your own values, goals, and circumstances.
We always love you and are glad you came into our parents’ lives. Sleep well and the beautiful world is waiting for you.
Photo: Synthesis
at Blogtuan.info – Source: Kenh14.Vn – Read the original article here
