A picture is worth a thousand words.
Simply put, a picture can convey an idea more quickly and effectively than the written word.
Here are some of the most iconic images:
Proverbs and rules-of-thumb are extremely effective at expressing ideas.
Here are 20 of the most well-known proverbs:
- Many hands make light the work
- Strike while the iron is hot
- Honesty is the best policy
- The grass is always greener on the other side of the fence
- Don’t judge a book by its cover
- An apple a day keeps the doctor away
- Better late than never
- Don’t bite the hand that feeds you
- Rome wasn’t built in a day
- Actions speak louder than words
- It’s no use crying over spilt milk
- Curiosity killed the cat
- My hands are tied
- Out of sight, out of mind
- Easy come, easy go
- The forbidden fruit is always the sweetest
- If you scratch my back, I’ll scratch yours
- It’s the tip of the iceberg
- Learn to walk before you run
- First things first
Then there are the rare examples when an image and slogan are synonymous with one another:
Combining an idea (proverb, rule of thumb and or first principle) with an image can be a really powerful tool for teaching. Particularly about a topic as complex and potentially confusing as personal finance. When working to teach our kids about money, we want the lessons to stick.
What if we could combine images with ideas, and use them to teach our kids about money?
Let’s contrast two children: Child A and Child B.
Which of these two children will be more financially successful?
Believes money is scarce and hard to come by. Sees the stock market as rigged against ordinary investors.
Believes money is abundant and comes easily. Sees the stock market as a means to create wealth.
When Child A sees this image, they have a negative reaction. Child B views it positively. All other things being equal, my money is on Child B.
Here’s the opportunity: Instead of simply teaching kids financial concepts, incorporate images and ideas. These will increase the likelihood of understanding and adoption.
Here’s what we’ll cover:
- Understanding ideas
- The 20 key images and ideas
The ideas are the most important part of this, and we want to teach kids the fundamental truths of money and personal finance. That’s where first principles come in.
First principle: Is a basic proposition or assumption that cannot be deduced from any other proposition or assumption. It’s what is true. These are the key ideas.
Once we’ve decided on the key ideas, word choice and structure becomes extremely important (think back to the 20 well-known proverbs from earlier).
The following three literary techniques/devices help to bring ideas to life and make them memorable.
Heuristic: Mental shortcuts that can facilitate problem-solving and probability judgments when confronted with a complex decision.
Proverb: A proverb is a short, common saying or phrase. It gives advice or shares a universal truth
Rule of thumb: A broadly accurate guide or principle, based on experience or practice rather than theory.
I’ve combined images with ideas to teach and reinforce the most important personal finance topics for kids to learn.
The 20 key images and ideas
It can be argued this list could expand or contract, and I’m open to the discussion.
Pay yourself first
This is the most important, gold medal, of personal finance. It means before we pay anyone else, we must first pay ourselves. If we fail to do that, we’ll get to the end of the month and there won’t be any money left over for us. Creating this habit positions you for long-term financial success.
Stay out of debt
Debt is a burden to be avoided at all costs, which is why this is the silver medal of personal finance. If you’re not currently in debt, do everything you can to avoid it. If you find yourself in debt, do everything you can to get out. Debt is the thief of dreams and a leading cause of stress and anxiety.
There’s immense wisdom in not putting all your eggs in one basket. The problem is, that can be boring. This is the bronze medal of personal finance because the vast majority of our investing should be done using a diversified approach. It will yield long-term financial success, and will keep us from taking on too much risk.
Stand for what you believe
If you don’t stand for something, you’ll fall for anything. Just as we need to be clear in our goals, we need clarity on our values and what we believe to be of greatest importance. We’re constantly being asked to pick up and champion causes, and there’s no shortage of things to fight for. But we have limited capacity and resources, so we must choose wisely.
Where you put your attention matters
We must tend to the parts of our garden that we can reach. There are massive problems affecting billions of people that I have little influence over. At the same time, I have a massive amount of influence over my own behaviors, my family, and my community. Start there.
Money has time value
The best time to plant a tree was 30 years ago. The next best time is today. The earlier we get started saving and investing, the better. Einstein famously referred to compound interest as the 8th wonder of the world. When we save and invest, we put that powerful force to work for us. The longer we wait, the harder it becomes to achieve financial independence.
There is dignity in labor
Money doesn’t grow on trees. And while there are many ways in which money comes to us, work is one of the primary ways to get it. There is value in work of all kinds; physical labor as well as knowledge work. Experiencing and embracing hard work builds character and perspective.
A sacrifice is required
We can’t have it all. Unless you’re independently wealthy, we have finite resources at our disposal. We must make choices and balance today’s desires with the needs of our future-selves. In order to be financially secure, we must spend less than we earn. In order to be physically healthy, we must make smart choices around nutrition and fitness.
Spend less than you make
Two thirds of Americans are living paycheck-to-paycheck. That means they’re broke. If you find yourself in this situation, you often end up with more month than money, and it’s not a good place to be. It’s important to live prudently within our means, and not to get overextended.
What’s gets measured, gets managed
Sharpen your axe. You’ve got an hour to cut wood, how do you spend your time. Gotta keep your saw sharp. “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” —Abraham Lincoln Axe in stump
Be of service
Serve others. Be selfless. Work hard to be a good son or daughter, a good brother or sister, a good partner, a good neighbor, and a good citizen. As JFK famously said, “Ask not what your Country can do for you, as what you can do for your Country.” How would our lives and our Country be different if everyone did that?
Give as much as you can
It’s truly better to give than to receive. What a gift and privilege to be in a position to give your time, treasure and talent to others.
Everyone can have an impact
Stop worrying about the scale of your impact. Get to work on becoming the best possible version of yourself. You’ll not only have an impact, you’ll inspire others to do the same. Over time, you’re impact will continue to grow and deepen.
Maximize your income
Abraham Lincoln famously said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” We each have roughly 50 years to work, we need to make the most of it by earning as much money as we can.
Save for retirement
God willing, we’ll all be old one day. When that happens, our future-selves will be eternally grateful to our younger-selves for making sacrifices on our behalf. Even if you feel like you’ll work forever, it’s prudent to save money in case you change your mind.
Market prices are generally correct
The Efficient Market Theory tells us that all available information has been taken into account and is reflected in the price of stocks. This means it’s very hard to “beat the market.” It’s because of this theory that low-cost, passive, index investing has become so popular. It’s wise to embrace this approach for the majority of our portfolios.
Give yourself permission
Write yourself a permission slip. Once you’ve created your financial plan, and are on-track to meet your most important goals and objectives, you’ve given yourself permission to invest in more aggressive or concentrated things like individual stocks or cryptocurrency.
Build your credit
For better or for worse, credit plays an important role in our lives. It has influence over where we live, the cars we drive, as well as where we work. Building and maintaining good credit is a sound financial decision.
If you can’t pay cash, you can’t afford it
There are limited exceptions to this rule such as your home and car. I’m not opposed to using credit cards, so long as you’re using them correctly. This means paying them off every month, and not rolling balances over. So long as you have the cash to pay for something, you can use a credit card and pay it off if you like. If you don’t have the cash, you shouldn’t be buying it.
Accept personal responsibility
This could very well be the most important life lesson anyone can learn. With great responsibility comes great power. Learn to own your successes and your failures. Seek opportunity, not security. Embracing personal responsibility will position you for success in every aspect of life.
You want your kids to be happy, successful, and good people. Introducing these 20 ideas, and helping them to apply them in their lives will go a long way to achieving that result.
When working to teach our kids about money, we want the lessons to stick, and combining an idea with an image will help.
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