Yes, that's my actual kids in the picture.
Perhaps I took this on one of those trips where I started talking about developing good financial habits...
Because when our kids are small, they often hear us talk a lot about money.
These are important times.
Ones when money personalities are formed.
But it's not till they get their first jobs, that we really need to ensure they’re all set.
I'm sometimes asked what parents can do to help their kids nurture good financial habits as they make their way in the world and start getting paid.
So I thought I’d put a few sage reminders and pearls of wisdom together to help (NB: they're not just applicable for the kids).
This list was inspired by the incredible Jonathan Clements, founder and editor of one of my favourite blogs, Humble Dollar.
Earlier this year, he was given 12 months to live.
So his advice hits home even more.
Inspired by his, here are 13 pieces of advice I give my own kids about money.
Poppy, Teddy, and George...
1. Take personal responsibility
Start with the 50/30/20 rule.
This is a simple budgeting rule that helps people manage their finances by dividing income into three main categories:
50% for 'needs':
These are essential expenses that are required for basic living.
Examples include:
- Housing (rent or mortgage)
- Utilities (electricity, water, gas)
- Groceries
- Transportation (car payments, fuel, public transport)
- Insurance
- Minimum debt payments
30% for 'wants':
This category is for non-essential spending that enhances quality of life, but is not absolutely necessary.
Examples include:
- Dining out and entertainment
- Hobbies and leisure activities
- Travel and vacations
- Shopping for non-essential items
20% for 'saving':
This portion goes towards building a financial safety net and achieving long-term goals.
This category can include:
- Savings (emergency fund, retirement, investments)
- Extra debt payments (anything beyond minimum payments)
- Investments or other financial goals
This encourages balanced spending and saving habits, which can be adjusted based on individual circumstances, financial goals, and income.
It's a flexible rule and serves as a starting point.
Of course, factors like where you live could alter it. For example, in an expensive city like London or Dubai, rent costs might make the 50/30/20 rule challenging at the start. So, perhaps aim for savings at 10% for the first few years, until your first pay rise, then increase to 20%.
Then, increase the 20% savings percentage to match the decade of your life, e.g. 30% in your 30s, 40% in your 40s and 50% in your 50s... and watch your wealth rocket.
2. Be an optimist
When you buy bonds, you rent out your money and get interest in return. But when you buy stocks, you become an owner—and owning ‘the great companies of the world' is the road to wealth.
Yes, if you own 100% stocks (as is perfectly reasonable at your age, given the time horizon ahead of you), and the global economy collapses, you’ll lose some of your gains. But so will everyone else, including those who spent their life conservatively eroding their future wealth by hiding in bonds and cash.
Done correctly, good investment is NOTHING like gambling.
The great companies of the world will compound away in the background and make wealth creation much easier for you later on in life.
Moreover, over the long haul, losing on a diversified stock portfolio is extremely unlikely. Every morning, billions of people around the world wake up, trying to figure out how they can make their life better.
Buying stocks is the best way to profit from their energy, ingenuity, dynamism and capitalism.
3. Own the world
Start with maybe buying the Vanguard Total World Stock Index Fund or something similar, which owns every stock worth having, and then let it work for you.
If you live in the UK, you can open a Stocks and Shares ISA with £500, and automate monthly payments into it from your bank account. Others (i.e. the bank of mum and dad) can also contribute to it for you, no matter where they live.
If you're living in Dubai, or elsewhere, you need a standard investment account, say from Swissquote or Interactive Brokers.
With a total world fund, there’s no need to guess which will perform out of the US, foreign stocks, large, small, growth, or value. Your portfolio will continue to grow as long as the economy does.
Other options may be slightly better but don't look at these until you've built up at least $100K, and probably much more.
4. Don’t pay too much attention
By this, I mean don’t look at your portfolio too often, don’t listen to market pundits, don’t buy ‘what's hot now’ and don’t fiddle with your investment mix.
5. Use your superpower
Are the pundits forecasting a possible market crash? That might make you anxious if you plan to spend all your savings in the next few years.
But if you aren't, ignore the noise.
Instead, think and act like a truly long-term investor (one with a multi-decade horizon)—something even most professional money managers struggle with, because they’re worried about their year-end bonus and about losing clients.
The ability to play the long game is the everyday investor’s most underused superpower.
6. Buy more when stocks drop sharply
When the stock market falls, people often suggest that the downturn will worsen. They may cite high valuations, geopolitical issues, or a severe economic downturn. However, we've watched this scenario play out many times before.
Throughout my investing journey, I've made it a habit to buy more stocks whenever the market dips.
This approach is driven by my belief that the global economy will continue to expand over time, which means my diversified portfolio will ultimately gain from the recovery that follows each downturn.
This mindset, along with a commitment to systematic, evidence-based investing in the great companies of the world and diligent saving, has been a key driver of my portfolio’s growth.
7. Ask questions and play defence
Bankers, insurers, stockbrokers and their salespeople will happily sell you expensive junk. Avoid it.
Review things no less than annually and potentially ask for a second opinion from an independently certified fiduciary (financial guide).
It's important you ask a fiduciary, as they're bound to act in your best interests, and not their own.
Do your due diligence, as they're less common than you think.
Then, ditch policies and products that become superfluous.
For your emergency fund, target saving enough to cover three months of living expenses instead of the usual six. This way, you avoid having too much of your money sitting idle in cash.
8. Know I’ll always have your back
Let's be honest, nobody really wants to ask their family for financial help when they're out of work or hit with unexpected big bills.
But I'm still here as a last resort.
And if you ever need help or just someone to talk to about whatever's on your mind – come and talk to me.
9. Not spending today will make you happier tomorrow
I’m not saying you shouldn’t treat yourself occasionally to dinners out, a new phone, or special trips.
But where possible, delay gratification.
If you want to buy long-term happiness, strive for a healthy portfolio. Think about future financial security, not short-term pleasures.
It's the one purchase you’ll never regret.
10. Travel lightly
And I don't mean when you go backpacking around Europe.
I mean when you travel through life.
Over the years I've amassed countless possessions that lost their appeal soon after buying them.
Ruthlessly get rid of 'stuff' you don’t need and don’t care about.
You'll soon see you won't miss any of it.
Believe me when I say it's one of the best things you can do for your mental, as well as financial, health.
11. To worry is human
You can thank evolution and our natural aversion to loss for this tendency - it applies to far more than just money.
We’re often surrounded by reminders of what could go wrong in life, even though most of the time, things end up just fine.
A market crash, for example, is inevitable. It's expected.
In fact, a successful investor’s career (30 years of building, 30 years of spending) should involve approximately 39 corrections and 17 bear markets...!
Remember:
- Market dips are normal. Ups and downs are part of investing. Markets fluctuate, but they historically recover, often at higher levels.
- Panic selling is costly. Many investors feel compelled to sell when the market falls, but that’s when you risk locking in losses rather than rebounding.
- Compounding needs time. The longer you stay invested, the more you can benefit from compound growth, which builds your returns over time.
- Emotions cloud judgement. Fear and anxiety drive poor decisions. Having a plan and sticking to it helps counter these impulses.
- Diversification is essential. Spreading investments across different assets reduces risk and steadies your returns.
- Investment success isn’t about timing the market; it’s about time in the market.
12. Aim for a sense of accomplishment
Want to feel content?
Strive to achieve one or two key goals each day, and you’ll likely reach bedtime feeling tired but fulfilled.
These can be around money, of course. But also exercise, reading, eating... the list goes on.
13. Pay it forward
When the time comes, make sure your own children (my grandchildren) grow up with sound financial values.
Push them to get good educations and develop sound habits around their wealth.
And their health.
Help them.
Guide their choices.
Be a role model, don't just talk the talk.
So, that's what I tell my kids.
Each of us has the opportunity to support the generations that come after us, helping our family build lasting financial resilience—and avoid the overwhelming stress about money that burdens so many.
If you'd like to chat about this for your family, I'd love to help.
