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October 06, 2003

Financial literacy: A common link b/t wealth and debt

Does your child know how to manage wealth? An article in today's Charlotte Observer addressed a potential crisis in the works ("There's a money crisis coming"): The article begs the question, "Would your child know what to do with his or her inheritance?"

The article states, "...the nation is in what's expected to be the largest generational transfer of wealth in history". The article offers great food for thought on money management and I quickly realized a parallel between managing wealth and preventing debt: Financial literacy. Money mismanagement can quickly destroy dreams, whether it's the quick depletion of a nice inheritance or a racking up a pile of debt on high interest credit cards. Spending money on short term wants and desires comes at a steep price and many people are left with a great deal of possessions with little or no value.

Financial literacy is a realization that you need money in all phases of life and an understanding that planning and growing your your money is the only way to have more money. Also key is visualizing what one eventually wants to do with his or her money. Big dreams can be squashed in no time when a person new to making decisions with money blows it all right away or, on the flipside, runs up a pile of debt.

All people should be given the gift of financial literacy- it starts at home, it starts with parents. Everyone starting out should understand what it costs to live and maintain in society and should be taught to vision where they'd like their personal finances to be in one, five, ten, twenty years. Financial literacy is a wonderful gift for parents to give to their children- in the long run, it might could be the gift of early retirment.

Posted by on October 06, 2003 at 09:32 PM |

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