Movie star Bette Davis once observed that “old age ain’t for wimps.” That’s especially true if you don’t plan for your retirement: the difference between old and rich, and old and broke, is 10% of every paycheque faithfully socked away. 

It strikes me, though, that you could apply the same “not for wimps” attitude to many aspects of life – raising kids, building a business, managing a career, or minding the family finances. Those things are tough any way you slice ‘em, and they ain’t for wimps either. And like old age, you don’t get any choice about whether or not you have to step up and do them.

That doesn’t mean, though, that a lot of people don’t still try to duck the chore. Perhaps we can all be forgiven for paying scant attention to budgeting. After all, we live in a culture which celebrates affluence and consumption. Television programs constantly show us the few hugely successful exceptions to normal money management, and advertising likes to portray everything as being easy and effortless.

With all those high-living aspirations before us, it almost seems embarrassing to actually work at mundane things like controlling our spending, and living within a budget. Regrettably, many of us tend to hope that our finances will just take care of themselves. In my experience, most people tend to either ignore money issues, or at least treat them a little too casually.

I believe there’s a real battle to be fought in reclaiming financial sanity from all the cultural messages around us. And one incentive to fight this battle might be to pass on what you know about money to your kids. If your offspring are like my own two, you likely have all the usual challenges: mortgages, insurance and pension contributions are still in the far-distant future, designer clothes and fancy toys are a must, and credit is thrown at them from every direction.

The most valuable lesson you can teach your kids is how to manage their finances. There are three major rules for this; the first rule is just knowing that, as Bette said, it ain’t for wimps. Financial discipline is never easy. It’s a tough job, and it requires some effort and some smarts.

The second rule is always to live within your means. As Warren Buffet once said, “Asking a banker if you can borrow money is like asking a barber if you need a haircut.” Having easy access to credit when you need it can be a good thing, but using credit to finance a lifestyle is definitely a bad thing. Our lifestyles should always equal our incomes, or preferably a little less. When your dollars going out are fewer than the dollars coming in, you’re in the desirable position of having positive cash flow.

That may sound like a simple principle, but putting it into practice is definitely not simple. Even adults and professionals can find themselves living above their means without even realizing it, so it’s not hard for young people to fall into that trap too.

And the third rule is never to miss a chance to build personal equity. Encourage young people to look out for opportunities with long-term potential. If they’re lucky enough to have two job offers, tell them to pick the one with the pension plan or the stock options. If they have skills that are in high demand, suggest that they consider building their own business, rather than just contributing to someone else’s balance sheet.

You may ask: did I follow all this excellent advice at the outset of my own working life? Well, I’d like to be able to say that I did, but I have to confess: it took me a while to learn this stuff.

Maybe you had the same experience, learning some lessons later in your life than you’d have liked. Tell the kids today what they need to know – who knows, they just might listen.

My next lunchtime seminar, entitled “Cash Controls for Busy Boomers,” takes place August 5, from noon to 1 p.m. The seminar is free, but please reserve your space: call my Assistant, Kathy Brunelle, at 613-788-8011, or e-mail Kathy.Brunelle@RichardsonGMP.com.

Alan MacDonald is an Investment Advisor with Richardson Partners Financial Ltd. Alan helps investors with over $500,000 of assets make smart decisions about money. For more information please visit www.alanmacdonald.ca or e-mail Alan at Alan.Macdonald@RichardsonGMP.com

Richardson Partners Financial Limited is a member of CIPF.