More than just fairy tales and make-believe, most children’s books contain invaluable life lessons – many of which can teach us an inordinate amount about money. Here are a few of our favourites:
You have plenty of courage, I am sure,” answered Oz. “All you need is confidence in yourself. (The Wizard of Oz)
Lesson: Many people shy away from financial planning and/or investing because they feel that they don’t understand it. However, investing is something we should all have the confidence to undertake. Whether you choose to go it alone or employ the services of an independent financial adviser, pluck up the courage and start your financial planning journey. It really does start with the first step.
START SAVING NOW
Happily ever after doesn’t begin with ‘once upon a time’: it begins with NOW. (The Frog Prince, Stephen Mitchell)
Lesson: For financial freedom to become a reality, you need to begin investing now. The longer you delay saving, the longer it will take to achieve your particular version of ‘happily ever after’. The best time to start saving was twenty years ago. The second-best time is now.
SETTING FINANCIAL GOALS
Alice: Would you tell me, please, which way I ought to go from here?
The Cheshire Cat: That depends a good deal on where you want to get to.
Alice: I don’t much care where.
The Cheshire Cat: Then it doesn’t much matter which way you go.
(Alice in Wonderland, Lewis Carroll)
Lesson: It is difficult to save money if you don’t know what you are saving towards. Setting financial goals will help you plot a roadmap to where you want to go. Once you have visualised and documented your goals, the path will become both clearer and easier to tread.
MAKING A FINANCIAL PLAN
You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose. (Oh, The Places You’ll Go! Dr. Seuss)
Lesson: Developing a financial plan means taking responsibility for the direction your financial future takes. Put yourself in a position of power by making a financial planning and taking control of your financial destiny.
Even miracles take a little time. (The Fairy Godmother, Cinderella)
Lesson: Compound interest, or compounding interest, essentially means that you earn interest on the interest and is the reason many investors are so successful. It is a powerful mathematical tool that anyone can use to create wealth over the long term. The snowball effect of ‘growth-on-growth’ cannot be underestimated, making time an important factor in allowing compound interest to work its magic.
Never hurry and never worry! (Charlotte’s Webb, EB White)
Lesson: The most challenging part of long-term investing is controlling our emotions. Downturned markets can cause fear and anxiety, leading investors to make rash decisions to sell shares at inopportune times. As investors, we need to make cautious, well-considered decisions while controlling our fear.
I am not afraid of storms, for I am learning how to sail my ship. (Little Women, Louisa May Alcott)
Lesson: Learning to ride through the storms created by short-term market volatility is a fundamental of long-term investing. As you continue on your investment path, you will become less fearful of short-term fluctuations and more focused on your long-term journey.
It is our choices, Harry, that show what we truly are, far more than our abilities. (Harry Potter, JK Rowling)
Lesson: Most decisions we take in life have financial implications. It is our financial choices, rather than our financial know-how, that ultimately determine our financial futures. It’s not how much money you earn that counts; it how you choose to employ your money that really matters.
MAKING FINANCIAL MISTAKES
You must never feel badly about making mistakes … as long as you take the trouble to learn from them. For you often learn more by being wrong for the right reasons than you do by being right for the wrong reasons. (The Phantom Tollbooth, Norton Juster)
Lesson: Everybody makes financial mistakes, and that’s okay. What is important is that we learn from our past mistakes and take corrective action going forward. Whether we made the mistake of lending money to an unreliable friend, falling for a Ponzi scheme or overspending on a material ‘want’, what matters is that we learn from the error and ensure it is not repeated.
But there was one other thing that the grown-ups also knew, and it was this: that however small the chance might be of striking lucky, the chance is there. (Charlie & the Chocolate Factory, Roald Dahl)
Lesson: The chance of striking it lucky is what drives many people to play to lottery, speculate on high risk investments, fall prey to Ponzi schemes and/or live in the unfounded belief that someday their ‘ship will come in’. There is no quick way to build wealth and it is unlikely that you will become wealthy by chance.
What if Christmas, he thought, doesn’t come from a store. What if Christmas … perhaps … means a little bit more! (How the Grinch Stole Christmas, Dr. Seuss)
Lesson: Many South Africans fall victim to the wiles of hyper-consumerism, especially over the Christmas season. Rather than re-investing bonuses and adhering to a festive season budget, many consumers find themselves heavily indebted by January and unable to meet their financial commitments in the new year. There are many inexpensive ways of appreciating and celebrating the true meaning of Christmas without overspending.
The more that you read, the more things you will know. The more that you learn, the more places you’ll go. (I Can Read With My Eyes Shut! Dr. Seuss)
Lesson: As investors, we need to remain up-to-date and educated on financial matters. Subscribe to online money blogs, read financial views and opinions, and find an adviser that regularly updates you on important changes in the financial services industry.
INVESTING IN EXPERIENCES
If more of us valued food and cheer and song above hoarded gold, it would be a merrier world. (The Hobbit, JRR Tolkien)
Lesson: Research shows that spending money on experiences rather than material things provides us with greater satisfaction and more lasting memories. While a material purchase may give us short-term satisfaction, spending money on experiences creates life-long memories, builds relationships, allows us to follow our passion or purpose, and connects us with society.
Trust me, Wilbur. People are very gullible. They’ll believe anything they see in print. (Charlotte’s Web, EB White)
Lesson: Online scams and ‘fake news’ are at an all-time high, with scamsters going to great lengths to make their scams appear legitimate. As consumers, we need to do our research, be hyper-vigilant, monitor our bank accounts and investments closely, question anomalies and insist on credentials before committing to anything.
PYRAMID AND PONZI SCHEMES
All that is gold does not glitter. (The fellowship of the ring, JRR Tolkien)
Lesson: Many South Africans have fallen victim to pyramid and Ponzi schemes which promise them unrealistic returns, exclusive membership and once-in-a-lifetime opportunities to invest. All that glitters is not gold; and if it sounds too good to be true, it probably is.
Have a fabulous weekend!