Why Money Education Is Important to Have a Good Life

We want our children to enjoy the good life. But what is the good life? Is it having lots and lots of money? A good marriage? An enjoyable job?

A credit card.Whatever your definition of the good life though, money plays an important part in it. However, there are many people who believe that the good life is possible only with the 5 Cs – credit card, condominium, car, cash and club membership. This definition of the good life is not only very materialistic, it is also incorrect.

There are those who end up being miserable because they went heavily into debt to obtain the 5 Cs.

Getting into debt and being unable to get out of it, is one of life’s greatest traumas. Why? Because it can lead to you losing your property, your reputation, peace of mind and a happy family life.

One of the reasons that people often get into debt is because they feel they have to follow what they see as ‘cultural’ requirements. Although they cannot afford it, they spend their savings and borrow huge sums to celebrate their children wedding or to spend during festivals like Christmas, Eidul Fitr, Chinese New Year and Deepavali. Spending too much on such occasions is really unnecessary. There is no need to impress friends and relatives this way.

A condominium.Another problem is that people feel that they have to own the goods and gadgets associated with ‘modern living’ even though they may not be able to afford them yet.

Social vices may also lead many people down the path of debt. They get addicted to alcohol, smoking, gambling or drugs.

Not surprisingly the debt trap can also lead to breakdown in family relationships. How many parents have had to disown their children to avoid being harassed by illegal money lenders who want repayment for loans taken by their children?

The good life is therefore only possible when you, not the banks, are in control of your life. You cannot be said to be in control when you being chased for payments for the car or credit card purchases.

The debt trap can be a vicious circle from which it is very difficult to break away. With the money going off to pay the debts, there will be no savings for the future and you may find yourself working harder but not getting anywhere.

Your child should therefore be taught to manage her money wisely so that she can save and invest for the future. To encourage her to save, make sure that she puts aside a certain sum of money every month upon receiving her allowance. Save first, then spend, instead of spending and saving whatever left over. There may not be any left over.

The good life is of course much more that being about money but money undeniably plays a significant role, for without it we cannot survive.

An important lesson to impart to our children is that to enjoy the good life we have, to be in control of our life and that comes when we are in control of our money.

29-01-2009 by Sorli

category: Money, Money Education

About LAI – Life Auto Insurance

We teach our children values and principles which we hope will see them through their lives. School also try to import good values and give them an education which will enable them to get a job or to further their studies at colleges and universities.

Yet most of us neglect to teach our children one very important lesson of life and that is how to manage money.

Money – you cannot live without it. Having it can bring you joy but lack of care in managing it can bring you misery – ask anybody who has creditors knocking at his door or worries about repossessors coming to take the car. This is not the type of life that we would wish for our children.

Money problems may not disappear even if you earn more money. Even rich have money problems because they do not know how to manage the money and find themselves knee-deep in debt.

The answer lies in handling money wisely. Yet for parents the financial scene today is so different from what we faced before.

For example, we never had so many banks ‘begging’ us to use their credit cards. Today it is also possible to buy on installments without even having to pay any deposit.

Without preparing our children for the world of easy credit, is it any wonder that today we have bankrupts who are still in their twenties?

Because it is a a whole new world out there, LAI – Life Auto Insurance hope this blog will able to help parents and peoples in guiding their children to understand some basics of personal finance.

Our children, students, brothers and relatives will one day have to make decisions which go beyond how much of the pocket money to spend at their school canteen and how much to put aside to buy that something special.

Decision about money will get more complicated when they get their first holiday job or leave school.

For example, as a child leaves home for further studies to work, she should have fundamental knowledge about how much it costs to live on her own. She should have an idea of how much to spend on rental and her rights as a tenant. Advice should be given on how to save on food and transport so that she can survive within her allowance or income.

It is also important that she is made aware of the dangers of easy credit. She should be taught that credit cards can turn out to costly affairs, something which she will not be told when she signs up for the cards.

She should also be informed that hire-purchase or easy-payment schemes involves more than just small monthly payments. Even if the goods are repossessed, for example, she can still owe the bank money.

She should learn about the above and lots more besides. With the right basic personal financial knowledge, it will be easier for her to better analyze the financial products which she will constantly be approached to invest in. Hopefully she will be less likely to fall victim to financial scams.

Handling money wisely is after all one of the essential living skills needed to survive in today’s world.

Until then, we hope this small blog can contribute to enhance the financial literacy levels of our children and we ourselves.

22-12-2008 by Sorli

category: Auto Insurance, Money Education