Money Lessons to be Learned from Another Generation
Tags: Money Management, Generation Z, Personal Finance, Financial Advice, Financial Planning

After Captain Chesley “Sully” Sullenberger III skillfully splashed US Airways Flight 1549 into the Hudson River on January 15, 2009 — saving all 155 passengers and crew in the process — he had a simple, yet compelling, explanation. “One way of looking at this,” he said, “might be that, for 42 years, I’ve been making small, regular deposits in this bank of experience: education and training. And on January 15 the balance was sufficient so that I could make a very large withdrawal.”

There is a wealth of information to be gained from the life experiences of older generations. The world may have changed, and the challenges may feel far more compelling now. But their success, and their failures, provide invaluable insights into what to do, and what not to do, when it comes to managing our money.

Take my best friend’s parents for instance. Talk about setting #lifegoals and they’ve excelled at it. They put their head down, worked hard and set up a booming business. With no financial support from their families, their success is entirely their own. Now they live life on their own terms, not dependent on anyone else. They’ve saved enough to last their lifetime and then some. They holiday where they want, with their children and grandchildren in tow. That’s the kind of role models our generation needs.

If this pandemic has taught us anything, it is to always have some money to spare. Be it medical bills, or hoarding provisions, having easy access to a contingency fund is absolutely needed, It has also taught us about managing risks. We could get a pay cut tomorrow, or lose our jobs, or far worse, lose the earning member of our family. We could have money when we need it, but not be able to access it, because it’s tied up in real estate or some long-term fixed deposit.

I’m not saying we should live our lives in constant fear of something going wrong. We need to live our lives now and enjoy the good things it brings. But now is also the time to work hard, set goals, save money. If our parents didn’t figure out their financial life, we’d be spending our money taking care of them now. Is that where we’re headed?

“It is not about what today was. It is about what tomorrow could be.”

I believe a slight shift in our attitude can set us on the right path. Instead of thinking of it as something we have to do, think of it as something we get to do. Remember the joy of getting your first paycheck? It symbolized maturity, freedom and pride in your achievement. That’s the feeling I’d like to carry all the way through to the finish line.

Nothing good stands without the right attitude. You may know how to do it, but if the attitude is negative, all you can say is “I could have done it”.

Let’s spare a moment to think things through.

The adage “look before you leap” comes to mind. Granted, our parents did not have to face the challenge of instant gratification; of everything being just a click away. Nevertheless, debt was not something that generation took lightly. It wasn’t easy to access loans as it is now either. So they bought things they could afford. There’s a lesson to be learned here. Instead of buying now and paying for it later, we can set the goal ahead of time and save up for it. The shift here is clarity of your financial goal and a positive attitude towards saving money.

Let’s not think of it as spending less, we’re simply saving more.

As financial planners we are always telling our clients to save up an emergency fund. That you never know when you’ll need it. The last year has convinced us just how unequivocal the advice is. When you think of it as earning more or spending less, it feels like a task. Instead, assign a goal, or a reward, to every penny you save. Not all goals will seem important, or particularly rewarding, at the time. But with some help, and some planning, you can start saving towards your life goals.

Let’s appreciate the choices we have.

Our generation has a big advantage over our parents. They had to be satisfied with investing their hard earned money in fixed deposits and post office products. And of course, the shining star of that era, real estate. We, on the other hand, live in the golden age of investment avenues. We have products that offer structure and clarity. They cost far less and have the potential to earn far more. And you don’t need a whole lot to get started. So there really is no excuse to not invest and let your money work for you.

Let’s be open to asking for help.

Unlike the older generation, we have an abundance of information at our fingertips. To weed through them and find the investment that is right for you can be challenging. To that I say, get professional help. They are professionals for a reason. So instead of trying to do something you don’t know enough about by yourself, you put your skills to test and find a good professional fit for you. And go a little old school and focus on building a relationship.

Let’s not compromise the ‘now’ or the future.

Another challenge of our generation is thinking long-term. We are so focused on living in the now that we hardly spare a thought for the future. The ‘now’ is important, but so is the future. Yet another lesson from our forefathers — think ahead. They believed in creating an estate they could leave behind for the next generation. When you save money, you need to have an objective and the objective defines how and where you invest. When you have a longer period to achieve a goal, you can take more risk in your investments & vice versa.

Let’s know when to take risks and when to protect what’s ours.

The older generation may have shied away from risk and uncertainty, but we may not always have the choice. Our goals may warrant taking higher risk to earn higher returns. And paying a premium to transfer risk by way of insurance. Finding the right balance is what is important. You may have to invest in equity but the risk can be reduced considerably if you invest for a long period. We work to build our wealth slowly and steadily and in the meantime, we make a choice to protect our families, our assets, and our life’s work, through insurance. It helps a great deal to stay optimistic as we forge ahead. Look at every high as a win and every low as an opportunity and you cannot lose.