The Financial Fairy Tales Blog

Let’s face it, in general teenagers and long attention spans are not often used in the same sentence. When it comes to talking to your teens about money something short and to the point might just help get the message across. The acronym CASH can help young people understand key concepts around money.

 C – Credit. There is a difference between good and bad credit. Loans to buy assets, such as a home, investment property or business can be good, while consumer debt, holidays and spending on toys are not. The mantra that all credit is bad is not helpful as it is not a black and white issue. Explain the differences between good and bad credit and encourage children to understand the importance of considering the total cost of a credit purchase rather than just the monthly payment.

The shiny gadget or car may seem affordable month by month, but taking a 5 year loan to pay for a computer that may only last 3 years is bad business.

 A – Assets. Things that can generate additional income. Encourage young people to understand early that building assets, whether property, stocks or their own business ventures can give them additional income and financial security. The passive income they generate may eventually allow them the freedom to pursue their own life choices.

A proven strategy for wealth is to avoid the short term lure of consumer debt and instead put away some regular money to start to build an asset base.

S – Saving. Studies of American millionaires, published in the bestselling Millionaire Next Door by Thomas J Stanley and William D Danko revealed a large proportion of millionaires became rich by spending less than they earned and saving the rest. Compound interest was described by Einstein as one of the wonders of the world.

Encourage a savings habit early by setting an example and it may become second nature. A prominently placed jar of coins for change can be used for a family trip or night out. Also investigate savings options that may return more interest than savings deposited at the bank. This may lead to risk versus reward discussions.

 H – Hard work is not the only way to be wealthy. Many people work extremely hard, for long hours, for little pay. Do billionaires such as Donald Trump or Richard Branson work harder than an inner city school teacher, labourer or factory worker? Not necessarily. Mega successful people have often put in years of effort to bring them to the point where they are seen today. Everyone has the same number of hours available in the day; it’s up to them how they utilise them. If young people are encouraged to develop their talents, passions and natural abilities then work can become play. They can also earn a passive income from some of the Assets discussed earlier.

Having a fixed belief that money only comes from hard work may actually have a detrimental effect on wealth creation. Beliefs are lodged in the subconscious part of our minds which run automatic filters on what we pay attention to. If your filters screen out money making opportunities that don’t fit the model of requiring ‘hard work’ then you may be missing out.

Use the CASH approach as a starting point to talk to your teens about money and you may be pleasantly surprised at their receptiveness. Whereas teenagers and long attention spans are not a natural fit, there aren’t many teens who will not want to talk about cash.