Once you learn to ride a bicycle, you can always ride a bicycle. One of nature’s certainties. Well, like most of our experiences, it is true only within narrow limits. There are exceptions.
My youngest brother, Michael sent me a story with an embedded video. It was eye-opening. Destin Sandler, engineer and YouTube educator devised a bike that steers differently than a conventional bicycle.
What did he learn?
That tells us things.
In a different context, how do you feel about saving money?
If it is an ingrained habit, it would he hard to stop doing so. I had a 91-year-old client who saved 40% of his income tell me, “I might need it when I am old.”
In the same way, it would be hard to start.
People are creatures of habit and for a reason. Most habits get us things we want. They are a shortcut to some complicated outcome. If you had to write the algorithm to ride a bicycle you would find that it was exceedingly difficult. Unconscious competence is common in humans.
Sometimes though habits become obsolete and require amendment. Amending works, but not well in the short run. The brain does not give up its hard won algorithms without a fight.
All of this is why strategic financial literacy is such an important subject.
More sophisticated subjects include where money comes from, and how debt and investment are like time machines that move spending in time so that spending need not correspond exactly with the time that the money is earned. Both have additional characteristics like risk, security, and compound interest. You can learn the arithmetic nuance later.
As times change it might be necessary to learn other techniques. If inflation is very high then borrowing at fixed rates probably makes sense. If interest is very low, spending seems to be a good choice. Almost no cost to acquire money if you need it and almost no value added to keep it.
People resist, but every time they adapt they get better at changing. Neuro-plasticity improves.
There is much to teach about financial matters, and the important material is not found in the details of how mortgages and credit cards work.
For example, how do you teach a child how income taxes work? Have them buy an ice cream cone with their own money and then you, as the governing body, eat a third of it. Half if it is a three scoop cone.
They will be tax aware forever.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.