12 Money lessons for my daughter

Most of us adults believe that money is a harsh reality of life. But the fact is that reality is neither harsh nor benign. It simply is a fact of life. It is our lack of objectivity that makes it look harsh or otherwise. The sooner we have this objectivity in life, the better are our prospects of living a financially healthy life.

Many of the most important money lessons I have learnt the hard way. However, I wish my daughter learns them the easy way and so I am sharing here 12 of the most important lessons on money that I would like to pass on to her:

1. First and foremost invest in your own education. Education is the most reliable investment and yields best return on investment. If you dont have enough education to get an edge, its the first place to invest in.
2. Live a lifestyle that you can afford with your limited income. Lifestyle upgrade should follow growth in income and not the other way around.
3. Money is earned and wealth is accumulated.  Weath is built over several years of disciplined saving and investing. Save before you spend. Start saving, start small but make it into a habit. Leverage the power of compounding.
4. Buy sufficient insurance to cover you and your dependents for  health, life, accidents and other risks.
5. Save for the rainy day. Bad times do not come invited but once in a while they do come. It best to keep some cash reserve to cover for tough times.
6. Money can buy freedom, pleasures,  insurance and comforts and these are important components of happiness and well-being. So, it deserves a place of importance and respect in our lives.
7. Aim to become financially independent as an individual at least by retirement. Financial independence is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.
8. Be grateful for whatever wealth or goodwill you get as inheritance and atleast try to conserve it, if you can grow it further.
9. Rent a home until you are not sure where you want to live and retire in the long term. Your next big opportunity may simply be in another town or city and you need to be able to make that change easily.
10. Dont use credit to buy comforts. Comforts are best funded by hard earned money.  Reward yourself on your successes with something more comfortable or luxurious. Also, dont spend to de-stress, its a vicious circle and hard to come out of. Destressing should be as simple as a good nights sleep, yoga, mediation or a cup of hot green tea.
11. Use money to free up your time if needed but not the otherway around. Automate all fixed expenses like rents, utilities and EMIs. Once you start investing money, automate the investing too. Dont waste your time micro-managing money.  Delegate   tasks to others to free your time.
12. Money is always the by-product of our hardwork, growth and success. Money follows success, not otherwise. Money can be a symptom of success but not the cause of success. Never make it into an aim of life. Aim for love, happiness, fulfillment, wellbeibg and peace of mind, not money.

Times today are more challenging and more competitive for children as well as parents. The fear of missing out can put our real priorities and growth at risk. The more the next generation learns from the mistakes of the earlier generation, the better are their financial success prospects. I have learnt my lessons and the important ones I am leaving here for posterity.