20 Ways to Prepare Kids for Wealth Building
April is National Financial Literacy Month. Although we should always be financially aware, this month is a great time to re-evaluate our financial status, goals and progress. We, as adults, are always developing new strategies to improve our finances, but there isn't enough dedication to teach our kids how to build wealth early in life. When I was a kid, no one discussed money with me. All I knew was that people worked, earned money and paid some bills. I didn't have a clue about how to really earn money and manage it properly. Once I became an adult, I quickly learned that wealth doesn't come easy. You must understand how to properly earn money, spend, save, give and invest. A combination of all of those is required to get and maintain financial success. If I knew then what I know now I would be in a totally different financial position, but everything happens for a reason.
Although I've experienced money struggles early in my adult life, I realized I needed to look at the bright side. I asked myself, "What is the positive? What lessons can I take away and apply to my life going forward? What can I teach others about what I've learned from my mistakes? What can I teach my daughter?" That's what I've done and will continue to do. I will teach her all of the foundations of personal finance so she can understand the rewards that comes from financial peace and financial freedom. My goal is to continue teaching her how to manage her finances and build wealth for a lifetime and setting up the power for future generations.
We can sometimes underestimate the power in kids. We assume that financial education is too complicated for them or it's too much pressure for a child to learn and discuss. THAT'S ABSOLUTELY FALSE! Do you realize how much information kids are exposed to all day and all night? They know way more than you think. This is why Financial Education is a must. Teach them early as possible. There are different levels of financial education to be taught to children of all ages. We can no longer afford not to teach them early.
We all have kids in our lives to teach. They could be siblings, our own children, nieces, nephews, cousins, children of friends, or children within our community. They don't need just a quick thirty minute talk. They need consistent financial education throughout their lives. Start today by helping the kids in your life by being more present and consistent with financial discussions. You never know who our children will become or what they will do now or later in life. Regardless of their industry, location or background, wealth building will always be a necessity.
20 Ways to Prepare kids for Wealth BuildinG:
Explore Entrepreneurship: Teach them to how start their own business. Encourage them to dream and be creative. Expose them to successful entrepreneurs within their community so they can see that it is possible.
Support College - A degree doesn't guarantee wealth and success, but depending on your industry a degree is required. If a child wants to be an attorney, doctor, or accountant they will need a degree. Encourage them to maintain the grades in academics and performance in extracurricular activities to qualify for scholarships. The key is graduating debt free. Take advantage of other debt free options such as grants, work study, working a job to pay out of pocket or finding an employer or potential employer to pay for their college expenses. Check out www.myscholly.com for more scholarship options. NO STUDENT LOANS!
Explore Careers - Allow them to pursue their own interests, passions, gifts and talents. Never force them to do or be what you feel is best for them. It's ok to advise, but allow them to choose their own path. If they choose to be a veterinarian then later decide to be a fashion designer, let them. If they choose to be a chef then later decide to be an engineer, let them. Continue to provide them with support and encouragement at every level of their journey.
Allow them to Work - Give them the opportunity to juggle work, school, volunteering or extracurricular activities. This will teach them how to multitask. Multitasking isn't always fun, but the reality is that it is required. Adults have to juggle many responsibilities all the time. Teaching kids how to master this skill early on will set them up for success later.
Don't Give an Allowance - Require them to earn money. In the real world, most of us don't have money that's just given to us any time we want or need it. We have to work to earn it. Teaching them how to earn money will motivate and inspire them to always work for what they want instead of feeling entitled.
Save - Encourage them to save a percentage of all monies received. Money from birthdays, holidays, graduations, or just because money. A little bit of money saved can add up to alot of money later.
Start Investing - They can start investment accounts at any age. An adult will need to oversee their custodial account. Start today by purchasing stock for your child and when they turn 18 it can be transferred over to them. Continue those investment conversations so they can learn about other ways to invest their money. Saving money is great, but investing is the main driver of your wealth.
Explain Insurance - Teach them why life, health, auto, homeowners/renters, disability, and long-term care insurance is needed and how it works. Explain what happens when you are uninsured.
Identity Theft - Show them how to protect their identity online, in person, and over the phone. We are all potential victims, but kids are definitely taken advantage of more than others. Make sure they are aware of all the tricks and games so they will know how to avoid them and how to resolve the issues if they become a victim.
Allow them Purchase - When you go to the grocery store, mall, gas station or shopping online, allow them to look at the products and services, review the prices, understand the taxes and other fees that could be added to the total amount owed. Let them swipe the card and examine the receipt for accuracy. Let them give the cash to the cashier and make sure the correct change is provided.
Allow Questions - When having those money conversations, allow them to ask questions. If you don't know the answer, that's ok. Be honest and admit that you don't know the answer. Get the correct information and regroup later. We must have consistent conversations for the kids to take it seriously and become more eager to learn about money.
Make it Fun - Be creative. It doesn't have to be boring or just black and white. Kids of all ages love adventures, but they also love one on one personal attention. Mix it up. Figure out what works best for each child you're teaching.
Needs vs Wants - Allow them to understand that you can't have everything you want right now. Delayed gratification is difficult for some adults to understand. Kids struggle with this too. Teach them that sometimes it takes a process to get what you want. They must learn boundaries within themselves.
Social Media Pressure - Some adults suffer from the pressures of social media. Kids suffer as well. We see others on their trips, in their new cars, new clothes, fabulous job, and having fun with their significant other. Some of us begin to think we are less than or don't have enough just because of what others may have. Kids compare their lives just like adults do. Teach kids to use social media for the positives it can provide, but to not allow it to control your life in a negative way. Teach them to not believe every single thing they see and hear on social media. Most importantly, don't make life decisions based on social media.
Credit and Debt - Teach them to not fall into the traps of maxing out credit cards, getting into payday loans, expensive car notes, and continuously borrowing from friends and family. Teach them to how to have their own money and not depend on others so heavily to financially survive. If they choose to use debt later, educate them on how to use the credit reporting system to their advantage.
Bank Accounts - Open a checking and savings account for them as early as possible. Teach them how to use it. Make sure they know and understand all of the rules and laws that apply to their situation.
Global Economics - Discuss supply and demand. Discuss the different economic systems. Teach them how money evolves not just in their city, but around the world.
Discuss Marketing and Consumerism - Teach them to be a wise spender and not a frivolously consumer. Teach them how to negotiate and get deals. Show them how to brand and sell their own products and services.
Be Patient - Educating kids about money is a process and takes time. Some information will be understood quickly and some will take more time to grasp. Make it challenging, but make sure your content and strategies are effective.
Don't Judge - Allow them to make money mistakes. Although we we would love for them to not make any mistakes, especially the same mistakes we made, that's just not the reality. They will make some mistakes. When they do, be there for them. Allow them to understand that mistakes and failures are life lessons that we all experience, but those lessons will bring success later.
Start today by teaching a child in your life about money!