How can you achieve financial maturity? - opinion

INVESTMENTS: In the end, it’s a mental maturity to let your best come out. – Lindsey Vonn

VARIOUS ISRAELI banknotes are displayed for an illustrative photo. The economy is well on its way to the pre-pandemic standards of budgetary discipline. (photo credit: NIR ELIAS/REUTERS)
VARIOUS ISRAELI banknotes are displayed for an illustrative photo. The economy is well on its way to the pre-pandemic standards of budgetary discipline.
(photo credit: NIR ELIAS/REUTERS)

Earlier this week, we attended a night of celebration and recognition for a group of girls who completed a year of National Service in Ofakim. It was such an uplifting night, and I think I speak for all the parents when I say that their daughters really made a difference in this community. Whether they stay there for a second year or do service in another place, almost all the young women will do a second year. Just amazing.

The evening started off with a short talk from a local rabbi who is involved with this particular program. He told a story of how when he got married, he made a deal with his wife: that if she called him a certain amount of times, he would answer the phone. He was studying in a kollel and only wanted to disrupt his studies if it was important.

One day, his phone rang and rang. He answered, and his wife was hysterical. She was screaming that there was a bird in the house. He said maybe she should open the windows and doors and let the bird fly out. She would have none of his advice and insisted that he come home. He raced home and managed to get the bird to fly out.

Fast forward a few years, and again, his phone suddenly started ringing nonstop. He only saw the missed calls a few minutes later, and when he called her back, there was no answer. He was nervous, so he ran home. He entered their home and saw his wife sitting on the couch with her arms folded. There was a shoe in the middle of the living room.

He asked her what happened. She said there was a scorpion in the room, and she took a shoe and smashed it. She requested that he move the shoe to make sure the scorpion was dead. It was. He then asked her why she had the courage to kill a deadly scorpion, but when there was a bird in the house, she was hysterical. She answered, “Our small children were in the living room, and I needed to protect them.”

It’s amazing how quickly we mature when we have responsibility. When dealing with money, the term is called money maturity. Writing for, Anthony Martin, founder and CEO of Choice Mutual, defines the term this way: “This process of becoming more financially responsible is called money maturity. Money maturity is a gradual process that happens over time. It is often associated with age but can also be influenced by factors such as life experiences and education. Nevertheless, money maturity typically leads to better financial decision-making and habits.”

“For example, financially mature people are more likely to save money regularly and make wise investment choices. Financial maturity can lead to a more secure financial future and peace of mind. It is an important goal for many people and can be achieved through careful planning and disciplined spending habits.”

I think it can also be defined as simply growing up and realizing that as we age, we will have all kinds of financial milestones, and if we don’t plan for them, we will be up the creek. A change in mindset from that of a child who just needs everything in sight and is clueless about how to pay for it, to that of an adult who hopefully realizes that with independence comes responsibility, and that self-discipline is the key to financial survival.

I often receive calls from young couples who are being supported by their parents and/or in-laws while they are studying. They call me in a panic because they just got “the call.” The call that they are now old enough and are being cut off from parental support. No more use of their parents’ credit cards. Time to pay rent. Nothing like having to grow up really fast!

Steps to financial maturity, both inside and outside of Israel

The first step in financial maturity is learning how to budget. Keep track of each shekel spent and each shekel earned. Tracking each expense by using an app or writing it down in a notebook can be very helpful to understanding where your money is going. Now that you are independent financially means that you can only spend what you bring home.

Realize that your beautifully furnished dream home will probably stay just a dream; you won’t have the same standard of living as your parents. Be patient. You can get there. It just doesn’t happen overnight. It took your parents years of saving and hard work to get to where they are now.

Every spending decision can have a crucial effect on staying out of debt. When you were on your own, if you felt like buying a coffee and Danish or flying to Greece, you wouldn’t hesitate. Now you need financial accountability.

Start a disciplined monthly and annual savings plan. Whether for a down payment on an apartment or thinking about future expenses such as marrying off children and retirement, the earlier you start saving, the easier it will be to fund those future expenses.

This isn’t just for young couples. There are plenty of adults who also need to grow up and mature financially. Take control of your financial situation so that your future will be secure.

The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.

Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing and is a licensed financial professional both in the US and Israel. He helps people who open investment accounts in the US.