Today I Learn… I make a point of learning something new everyday. This is what I learn each day

1, Jan 31, 2009

Worst Economic Time = Best Educational Time

Filed under: Economy,Education — admin @ 8:38 am

Undoubtedly, this is the worst economic times that we ever face since the time at least I can remember. It is so bad that nearly everybody lost something in the process, either your job or the value of your savings, or even the dear lives as we see an increase in suicide cases. Some of our investments have been cut by half — big ugh. It hurt so much that I don’t even want to think about it. Yet, a smart move should be trying to salvage something out of the worst turn, transforming bad into something good by making it the best time for needed education on financial discipline and consumer-driven economic model, etc.

In the past, my children could not fully appreciate some of the practice in our family, that is, no Christmas presents, no allowances, no pay for doing household work, always putting part of paychecks in savings, etc. One of my children kept comparing our expenses to those of her classmates. They used to think like average Americans, that is, you are rich only when you drive, dress and house like a millionaire, regardless how deeply indebted you are.

Now they understand that you are rich only you have savings because paycheck can be cut off at any time beyond your control. Without savings, you are rendered penniless upon receipt of pink slip. At difficult moments, it is better to have savings in reserve than all the useless junks that they once so much desire but have not needed. They understand why some people become homeless instantly once they become employed. “Don’t they have some saving?” No, they don’t.

In the past, they were told by society that they would be good citizens until they become good consumers, the more money pouring into the market, the better to our economy, as our GDP is largely driven by consumer spending. Savings mean contraction, hurting economy. Now, they know the first responsible thing to do is taking care of themselves financially.

They used to talk about what they would buy when they had money — big house, fancy car, the most luxurious furniture, more than celebrity style of living. Now they learn what should be taken care of first. My daughter told me she would spend what she desired until she had enough savings. Before that, she only spends what she really needs for a living.

To be sure, children’s appreciation of a toy never lasts longer than a week or so. It is the parents who should be wise enough to put a brake to any unreasonable demand that the children might raise. The wise parents should know what is really good to the children. It is so easy to turn your hard-earned money into some kind of junks, but totally impossible to transform it back.

Recently my daughter and I talked tremendously on this topic, so much so that I am deeply convinced that the current economic crisis will leave an indelible mark in her memory and will definitely influence her in many ways.

Well, think of the loss in stock market as your tuition in economics 101.

2 Comments »

  1. Well said indeed! I recently had a big fight with a minor in our house in regarding to his cell phone upgrade. He dropped his cell phone a couple of weeks ago and had it damaged. I told him he could get an upgrade phone for free or re-activate one of our old cell phones if the free upgrade is not yet available. Instead of following my advice, he went ahead to get a top of the line cell phone — Instinct, which cost more than 100 bucks after rebate, even though himself didn’t have enough money to pay for it. His dad didn’t say no to his choice instead agreed to lend him some money. I was furious when I saw them took the new phone home, mostly because I felt we lost an opportunity to teach our children one of the most important personal financial responsibilities — never spend beyond your means. Upon my insistence, they had to return the phone and get a free upgrade one. The boy was not happy for many days afterwards. I think I learned two lessons from it; one is parent should teach their children to differentiate what they need from what they want; second is that parents should be unequivocal on the financial principles and teach their children to follow them in their daily life.

    Comment by a friend — 1, Feb 2, 2009 @ 12:42 pm

  2. Thank you for sharing it.
    The child may be unhappy and may not understand it at that moment, but I believe they will eventually. I have denied my children of many things that they wanted but did not actually need, knowing they would be unhappy at that time. But both of them now appreciate the savings and security that we now enjoy. They begin to appreciate the fact that we have provided them the most protective life, which is the most important chapter in their childhood.

    Yes, we parents must have the guts to say NO when needed and must know better than yielding to their unreasonable demands just to satisfy a brief moment of need at the cost of cultivating a good habit and long term savings for rainy days.

    Comment by admin — 1, Feb 2, 2009 @ 1:23 pm

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