The Origin of Financial Paradigms

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Monday, June 13, 2016 /R.A. Bridges

What is a paradigm?
The word “paradigm” has several meanings. In this book we will use the most popular one in relation to human behavior. In this sense, paradigms are our beliefs, our truths, or the things that we have always accepted as certain, and on which we base our actions.


What can be done in the financial aspect during the first stage of life?

A lot! It is obvious that the child who grows up with the adequate financial paradigms will have a greater chance of becoming a self-privileged person. Of course, parents have to seed those paradigms in the minds of their children. The first aspect that they should consider is early financial independence. The self-privileged person should grow with that objective in mind. In order to emphasize how important it is to be self-responsible as early as possible, I will address him/her directly. This message goes to the potential self-privileged person who is still in the first stage, from the womb of the mother to the youth. He/she will receive the message through his/her parents. Therefore, I talk to you, my young friend. Your parents will be the ones to read this for you, they will absorb the recommendations offered in this text and they will put them into practice for your benefit. They will be responsible for starting you on the path of your financial education and instill the culture and paradigms that will have a remarkable influence on how you act throughout your life. You need the adequate paradigms to lead you in the correct direction from the beginning. Probably due to the wisdom of your unconscious mind, you have already noticed the importance of the majority of the topics that we are going to discuss; and how meaningful they are for you.


What basic financial planning is required during the first stage?

You are not expected that you set your financial objectives in this stage; these should be established by your parents until you grow up and take control of your own life. This is a stage of dependence, during which your participation in the economic matters of the family is limited to the area of the unconscious expenses. You know what you want, and you want it now! It doesn´t matter if your parents have the resources or not to give this to you. Some parents probably do not know that, regardless of their resources, they should teach you the virtue of the future reward. Others know, but in order to avoid a tantrum, they choose not to teach you that lesson. Daniel Goleman, in his book “Emotional Intelligence”, shows us a very interesting experiment carried out by the psychologist Walter Michel in a kindergarten at Stanford University. A person tells a boy he will give him one marshmallow immediately or two if the boy can wait for that person to finish the task he is doing. Let us see the original story:


The marshmallow test:

“Imagine you are four years old and someone proposed this to you: if you are able to wait until that person finishes the task he is doing, you will get two marshmallows. If you can’t wait, you will only receive one, but you can get it right away. Undoubtedly, this test challenges the soul of any 4-year old creature. It is like a little universal and eternal battle between impulse and restriction, the inner me and the ego, desire and self-control, incentive and delay. The child’s option represents a revealing test; it can show a quick interpretation of his personality and the path that he/she might walk on along his life.”


“This test continued along the children’s life until they finished high school… the emotional and social differences between children who took the chocolate and the ones that delayed their awards are remarkable. Those children who resisted temptation at four came to be more competent and sociable as teenagers; they were personally effective, confident and more capable of dealing with any frustration… they accepted challenges and they preferred to face them instead of giving up… they were confident and trustworthy; they took initiatives and got involved in projects. And, after one decade, they were still capable of delaying rewards so that they could achieve their objectives.”


“Being able to put off your impulses is the foundation of a series of efforts, from being on a diet up to getting a Health degree.” You must convey to your parents how important it is that they teach and help you practice the virtue of delayed gratification. Patience and persistence will be very useful in life. Knowing to seed, cultivate and take care of the fruit and only consume it when it is mature is an invaluable lesson that will help you towards success. Ask them, moreover, that from an early age, they teach you the value of money and the basic concepts of its administration. As you grow up and become more conscious, you must understand a basic principle of economy with which we all have to live:


“We have limited resources to satisfy unlimited needs.”
Your parents will try to prepare you for the future by offering you the opportunity of getting some additional abilities to your standard education: language courses, piano, ballet, gymnastics, tennis, soccer, baseball, etc.; disciplines that can eventually help you in specific situations. However, they usually forget an important area that you will have to face throughout your life: money management. Whether you are going to like finance or not, you will have to handle it! Insist to your parents that, as soon as they think it is possible, they get you involved in the financial matters of your family. When they tell you that “money does not grow on trees”, ask them to explain the meaning of the phrase; request that they do not give you your monthly allowance without teaching you simultaneously how to administer it. Do not let them, or anyone else, tell you the story that poverty is good and that rich people do not go to heaven. As you may have realized, there is a lot to learn and assimilate regarding Personal Financial Planning during this period. Do not forget, it is an important stage. The concepts acquired at home, school and everywhere around you, are going to be crucial in your financial life. They are the paradigms that you will base your future on in order to succeed. At the end of this stage, at the age of 18, you should have finished your high school and you will be starting a professional life, whether it is by getting an Associate's degree or Bachelor's degree, or learning an occupation

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Source:Finance for Dads by R.A. Ridges.

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