What you can do to give them a leg up in the game of life.
Parents want what is best for their children, including that they grow up to be happy and successful.
But not all parents know how to teach their kids to be financially successful.
Here are a few things that I’m doing with my four kids to ensure they have the opportunity to do well in life.
Get Financially Literate
The unfortunate truth is that many adults are not financially literate, even in the USA.
This article from CNBC says only 57% of adults in the US are financially literate.
How can you teach your kids about finance if you don’t understand it yourself?
If you are expecting the school system to take care of that for you, you better think again. The same article states that only 12 states (out of 50 in the US) require a basic personal finance course.
The job is on us, parents.
We have to get smarter about money so that we can help out kids get smarter about money.
Not sure where to start? Check out:
27 Best Books To Build Wealth
Knowledge is Power (updated Aug 2022)
Talk To Them
I know, I know. Who wants to talk to a teenager, right?
But what we say and do matters as parents, including what we say and do about money.
The CNBC article says that 31% of parents never talk to their kids about money at all.
If you don’t talk to them, then who will?
Chances are they are learning from watching you, even if you aren’t teaching them intentionally.
Struggling with bills and debt? Your kids will think that is normal and OK.
Driving expensive cars you can’t really afford? Your kids will likely do the same.
A couple of years ago I started holding regular financial education lessons with my kids to teach them about money.
We sit around the dining table and talk about a topic like:
starting a business
assets vs. liabilities
While they certainly won’t be experts after a few conversations, there will be (I hope) some little nuggets planted in their brains that will grow over time.
My kids know that I own real estate, even commercial real estate, so they understand that they can own it too.
My kids see me investing in the stock market and know that they can do it too.
They see me starting businesses and failing (so far), so they know they can try and fail at business too.
And they know that while money isn’t everything, it is an important part of modern life that needs to be treated with respect.
Theory is great in theory, but practice makes perfect.
Don’t just talk to your kids about money, make them practice.
Give them an allowance and help them make good decisions with the money.
Teach them self-control so they don’t blow it all on the most expensive toy they see in the store.
Help them invest some of it in low-cost index funds so they can start building wealth at a young age.
At my house, the kids earn points for doing things I want them to do like exercising, playing outside with friends, reading, etc.
Those points can then be exchanged for things they want like pizza or watching TV.
But every month I make them invest half of their points into investment accounts.
I convert these points to dollars and buy low-cost index funds that I manage but will pass on to them when they are adults.
This teaches them to invest, and it will give them a bit of cash when they start on their own.
Teaching your kids about money is critical if you want them to be successful in life, but it doesn’t have to be difficult.
Get yourself educated first (or get educated together) if you aren’t already there, talk to them regularly about money, and then help them practice in the real world.
While they won’t all grow up to be Bill Gates, a little effort will certainly help them get a good footing in life.
Your adult kids will thank you for it.
Best of luck and let me know how I can help!
After struggling to build wealth early in my career while following traditional financial advice, I set out on a path to learn about investing. Over a decade later, I’m financially secure and working towards full financial independence through real estate and the stock market. I have succeeded in building my financial ark to help me weather whatever storms may come.
I founded Building Arks to help busy professionals like you ignore mainstream advice and build real wealth.
I have no affiliation with any sites listed, nor do I make money from any partners or recommendations in my articles (other than Medium). I am not a lawyer, accountant, or certified financial planner. All material is presented in good faith for informational purposes only based on my knowledge and experience. It is not intended to replace professional advice. You should always consult an expert before making any legal, tax, or financial decisions.
Contributed by Building Arks with Jason Clendenen
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