Your parents’ financial advice probably won’t work for you
When it comes to personal finances, your parents advice may not necessarily hold up in today’s inflation-and-debt-ridden landscape.
What financial advice did your parents give you growing up?
The economy has significantly changed over the years, and that means your parents’ advice may not apply in today’s financial landscape. Yes, they may have meant well, but those financial nuggets of wisdom may not work today, where the cost of living is astronomical, healthcare is exorbitantly priced, and job hunting is getting worse.
Here’s why their advice probably won’t work:
- They don’t see the whole picture
Your parents probably don’t fully understand your financial situation. They may not even know how much money you make, your spending habits or your financial goals.
They also might have biases. You might find that your parents don’t like the stock market, and they want you to invest in real estate instead.
You would do well to get objective advice from an expert because financial advisors provide guidance based on your needs.
- The financial industry has changed
We now have smartphones and apps to handle money in ways our parents never imagined.
In the technology age, investors have new options. For instance, there are automated investing advisors, also known as robo-advisors, which use advanced software and computer algorithms to build and manage clients’ investment portfolios online. They’re a lower-cost option than most human advisors. Hybrid services pair the automated management of a robo with access to human advisors when customers have questions.
In Kenya, there are robo-advisors like Fourfront Management Limited which provides automated investment advice through the use of advanced data analytics. There’s also Ndovu, an app developed by Waanzilishi Capital.
The Ndovu app gives investors access to collective investment schemes approved and registered by the Capital Markets Authority, like Government bills and bonds and Exchange Traded Funds listed in offshore stock exchanges.
- Lifestyles and work have changed
As a young adult, the goal in financial planning is to live a good life with available resources, but careers and living patterns have evolved. Unlike Baby boomers and Generation X who stuck to one job for longer periods, millennials and Gen Zs are freelancers or contractors, and change jobs quite fast.
Traditional choices based on staying at the same company or in the same city for decades make less sense now. This therefore means that a generation like Gen Z, for instance, sees it fit to rent instead of buying a house.
- You’ll have to live with the decision you make
Your parents can try to talk you into buying that investment property or piece of land in Naivasha, but at the end of the day, you’re going to be the one signing the cheque.
If the investment property doesn’t turn out to be the goldmine your mother predicted, you can’t turn to her and say, “That’ll be KSh1million,”.
It’s easy to give financial advice, but it’s much harder to live with the consequences of it.
Your parents may be financially savvy but ultimately you are the one who knows what you want and how to get it. Part of becoming an adult is learning how to manage your finances. That doesn’t just mean making money and saving money. It also means making thoughtful, informed financial decisions.