As someone who entered adulthood during the economic boom of the 1990s, I, along with my partner, absorbed two misleading beliefs: jobs would always be abundant, and real estate was a guaranteed moneymaker. Our first child was born amid the Great Recession, followed by a second during a slow recovery. While we managed to keep our home, I found myself unemployed, and our savings vanished almost instantly. Navigating parenthood on such unstable financial ground, while witnessing friends and neighbors lose jobs and homes, was a daunting experience. Like many who lived through economic hardships, I now approach money with greater caution and want to impart these vital lessons to my children. Here are eight key insights I aim to share:
- Pause Before You Purchase: Whatever item you think you need, hold off for a month before buying. In my experience, the desire usually fades, often replaced by something else entirely. Learning to sit with that yearning is a valuable skill.
- Evaluate Lending Offers Carefully: Just because a lender offers you money doesn’t mean you should accept it. If a bank believes you can afford a mortgage but your calculations show otherwise, trust your own financial assessment.
- Consider Layaway for Big Purchases: If you’re eyeing a costly item, set aside some cash each week. This method not only fosters appreciation for what you buy but also discourages impulsive spending.
- Home Is What You Make It: Owning a home doesn’t inherently make it a haven. Many families create loving environments in rental properties, proving that a home is more about the people inside than ownership.
- Recognize the True Nature of Homeownership: Your residence is primarily a place to live, not a guaranteed investment. There’s no assurance that its value will increase when it’s time to sell.
- Invest in Experiences Over Material Goods: Allocate your resources to experiences rather than possessions. Research consistently shows that lasting happiness stems from experiences like travel or shared activities, rather than the latest gadgets.
- Live Frugally While Young: Aim to limit housing costs to one-third of your income, if possible. Many young adults, especially in challenging job markets, benefit from living at home or with roommates, which is perfectly acceptable during those formative years.
- Embrace Adaptability: Unlike previous generations that tied their identities to specific careers, today’s success hinges on flexibility. I aim to teach my boys to continuously evolve their skills and networks, ensuring they can navigate changes in the job market.
I hope my children won’t have to recall the challenges of growing up during a recession. Ideally, by the time they enter the workforce, the economy will resemble the robust conditions of the late ’90s—one can only hope!
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Summary:
This article outlines essential money lessons for children from parents who experienced the financial turmoil of the Great Recession. Key insights include the importance of delaying purchases, assessing lending options critically, valuing experiences over material goods, and fostering adaptability in an ever-changing job market.