What is it – raising the level of knowledge about money, wealth and financial matters. The intent is to help those who have or will have money under their responsibility learn about some basic concepts and are able to understand and hopefully manage their finances.
Why? – More than $ 30 trillion will pass between generations in the next 30 years, inheritances and gifts will runneth over. How will the following generation handle this wealth? Do they have the tools, skills and interest. Many of us wish to ensure that the wealth is appropriately managed and spent for the benefit of future generations. After all, a lot of effort was made to accumulate your wealth.
How? – The key concepts are simple but not easy to effect in practice. Some of these concepts include:
– budgeting: to preserve capital, spend less than the annual returns from your investments each year
– for investment returns, risk and return are inversely correlated
– the power of compounding is how wealth is accumulated
– is money a tool or a end in itself? your personal philosophy.
When? – it is never too later nor too early to begin improving financial literacy. Plenty of age appropriate resources, are available through the internet, financial institutions and through accounting associations to learn more.
Go explore and learn. Your children will appreciate your efforts.
Learn, think, apply!