While sitting at my computer last night, Son #2 wandered over and started chatting me up. He recently received some cash gifts for his 10th birthday, and had money on his mind. He’s always been good with money and often amazes me with his wisdom.
Once again, he didn’t disappoint:
“You shouldn’t spend more money than you have or you’ll go into debt. And the amount of debt doesn’t stay the same – interest gets added onto it. And the longer you’re in debt, the more you have to pay.”
See? Personal finance isn’t that hard. Even a ten year old gets it. 🙂
Curious as to the depths of his understanding when it comes to things like this, I asked a question:
What if you’re already in debt? How do you get out of debt?
“You should stop spending so much and find a job where you get paid enough to pay back your debt. You still have to meet your five basic needs, but you should buy as little as you can.”
Intrigued, I asked him what are your five basics needs?
“Food, water, clothing, shelter, and air. But clothing isn’t really a need unless you live in really cold weather, or where there are laws against being naked in public.”
So there you have it… A straightforward plan for keeping (or getting) yourself out of financial trouble. When you get right down to it, the basic tenets are personal finance are very simple. If a ten year old can grasp them, why can’t adults?