For a good long time now I have noticed a new culture within the young generation who are either professional or are running their own small business and live from pay cheque to pay cheque. On top of this they also indulge themselves through credit cards or any other extra means available.

It strikes to me that all of this is taking place because of lack of financial knowledge and understanding of the concept of risk. Financial education was not part a of the school curriculum in the 80’s and 90’s when I went to school, but if it had, I suspect there would be far less people able to identify with this category described above.

Time, however, is changing and as a parent of my little daughter, I would like to teach her these 8 habits that I learnt through my experience in this world. I would encourage the school that she will go to germinate demand for financial literacy and competency within kids.

What follows are the eight basic habits I employed from my first job working in my dad’s shop for pocket money and then working in shipping industry to being a part time accountant while completing my university and then migrating to Australia.

Habit 1:

Work hard and smart. Not only in India but any part of the world has its fair share of lazy and sitting idle people around you and it is very easy and tempting to join that club. To keep yourself away from this temptation what you require is solid work ethics. Parents of all financial persuasions need to demonstrate the benefits of hard work, even if you are financially secure. You are not loving your kids by buying them latest gadgets or if you take them on holidays with you to every country, by the time they are 17. Please explain what they have to work hard for when they grow up?

I know a parent of two adult kids who works two jobs, he is very successful within his own profession and sells mobile phones accessories in the weekend markets. I also know a successful IT professional who sells Indian food in the weekend markets too. The extra cash might not make a difference, but it’s the demonstration of industriousness that will assist their kids to transition from dependency to successful financial future.

Habit 2:

Pay yourself first. Whether you call it savings or pocket money or anything, what matters is that from the first receipt of income, you first pay yourself. Many adults who are living on pay cheque to pay cheque are living beyond their means and by the end of week or month there is nothing left to save. Reversing the habit of spending first and then saving to saving first and then spending will help you to save money if you find it hard to save.

A better idea is to divert 10% or more of one’s income to a different account and destroy its ATM card and cheque book so that you cannot access the money. The best way is to consider that you never earned that money. Then you spend on all your necessities and luxury items and philanthropy that you want to do.

Habit 3:

If you can’t pay cash, you don’t deserve to have it. Don’t apply for a credit card. I do have a personal credit card but the limit is far smaller than a university student’s credit card.

Habit 4:

Electronic gadgets and shopping malls are soul destroying and financially damaging.

Habit 5:

Invest in a businesses or start your own. Either learn the path of successfully investing yourself or, if you don’t know how to or understand difference between investing and speculating then invest through the one who knows it. Starting a business or owning equity might not suit everyone, but take a look at the world’s rich list and nowhere do you find: “Mr Ajay. Wealth: $US 5 billion. Source of wealth: salaried employee.

Habit 6:

Choose carefully. I am very fortunate that I married a person who does not care for material possessions.

Well, that implies to everything in your life, from college to career, from cars to houses, shop around, compare and then pick the best one that suits you.

Habit 7:

Be patient. The most adverse and permanent financial shocks stem from lack of patience. You can become very wealthy without borrowing any money, provided you are not in a great rush. The accumulation of debt and all such financial shocks are function of impatience and the fear of missing it out.

The stock market in particular has a habit of transferring wealth from impatient to the one who has a lot of patience. When it comes to debt, less is always more.

Habit 8:

Sacrifice. Nobody really wants to hear this, especially the young, but the very core financial success depends on it. A high school student can sacrifice a year or two of partying and get good grades and set them up for a life with more enjoyable choices. A lifetime of better options await the person willing to defer pleasure temporarily and as said above financial success is the idea that builds up with choices that are made with opportunity costs.

And don’t forget: you will be older before you know it, and for longer than you think.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise to take professional advice before going ahead with our views.