How you handle your finances today might be connected to your childhood experiences.
Most parents understand how important it is to teach kids about money. Nearly all parents believe that teaching personal finance to 8 to 13-year-olds would help them understand the value of money better. However, they may be starting this important education a little late.
How early do I need to start being aware of this?
Researchers at Cambridge University discovered that our basic money habits are mostly formed when we’re seven years old. This doesn’t just involve understanding how to count money. It also includes how we handle our emotions related to money and our overall perspective on it.
As adults, this means that our childhood experiences can influence how we make financial decisions. Even if we have all the information about the tax benefits of a Stocks and Shares ISA, we might still struggle with sticking to our strategy when the market becomes volatile due to emotions formed during our childhood.
What can I do to manage my emotions?
Don’t worry, it’s not too late to improve our money habits, even if we develop them early on. Here are a few tips to help.
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Understand your money habits. Analyze how you make financial decisions. Do you rely on facts, or do emotions play a significant role?
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Make sure to regularly monitor your finances. It’s easy to overlook this, but understanding the true impact of your habits can be very enlightening.
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When making significant financial decisions, it’s important to give yourself time to think things through. Emotions can cloud our judgment, so taking a step back and sleeping on it can help you make a more clear-headed decision.
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Consider working with a financial planner who can help you manage your money more effectively and work towards your big life goals.
