My parents had little financial literacy

My parents were educated, middle class and raised in the 1920’s/1930’s. They tried to instil in me a set of ethical principles that would guide me through life. It was a work in progress when my father died. I was only 12 years old when he died. Neither my father nor my mother had what we would call ‘financial literacy’

My mother did her best. Often working two jobs and going without for herself so she could provide for her children.

When an unexpected bill came in or a major purchase was required, her solution was simple: work more, work harder.

It took a long time for me to acquire anything close to awareness of money and how it works for you and against you.

In my years as a teacher, observing the behaviour of teenagers, I did learn something.

Teenagers (read people) like to be part of a group. The easiest group to belong to is your immediate cohort and peers.

What does that have to do with financial literacy?

We want to be part of that group. We feel comfortable and secure. When we need support or advice it is from this group where we get our lead. How to dress, how to talk, how to act, how to use money.

So, what then is the main influence on us about money? Our peer groups.

People aren’t poor by choice. They are poor or remain poor predominately because they associate with people who are poor. Worse: people who think poor.

If they knew anything about wealth creation, they would be wealthy.

Why are so many lottery winners declaring bankruptcy three to five years after their win? Because the group that gives them advice is their cohort. Again, if they knew how to handle money, they would use their winnings to generate more wealth. The rich know about money.

Here is a thought experiment for you: think of a rich person. Any person. Now imagine that through circumstance they lose all their wealth. All of it. How long do you think it would be before they clawed back some if not more than they lost?

If all the wealth, and I mean ALL the wealth in the world was evenly distributed between all the people, how long before the wealth would gravitate to one end?

It makes common sense. Millionaires associate and learn from other millionaires. To achieve that higher order thinking you need to associate with people already there. Otherwise, it becomes a very hard road to slowly educate yourself to think differently to your group.

I love shares. I take risks with shares, but the risks are calculated. Most of my peer group see shares in the same light as poker machines: gambling. These same people are happy to buy lotto tickets or bet on the football.

To learn about wealth creation, you need to step away from what is holding you back. You need to make another set of contacts: people who will help you go to the next level.

Remember though: Your friends and family are still important and always should be.

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