Teaching Your Family The Basics Of Wealth Creation
Money has always been a touchy subject among families
. Some wealthy parents are careful to reveal their real worth to their young children lest they become too complacent and fail to develop a work ethic. Middle and lower class parents, on the other hand, may tend to stress how money is tight but dont really teach their children how to properly budget their allowance. Yet, we expect them to know the value of money and work their way to prosperity when theyre older.Regardless of our income level, we are responsible for teaching our own children the rudiments of wealth creation. Schools are not required to teach them how to handle their money, so it is up to adult family members to guide them in these matters. Below are several suggestions for teaching them the basics:
Teach them the difference between needs and wants. For example: we NEED food in order to live; thats why we buy it. Its normal to WANT or crave for expensive Belgian chocolates, but your body can live without it.
Give them a fixed weekly allowance. Ensure the amount is reasonable and meets their needs within one week. Part of wealth creation is learning to live within ones budget. Make it clear that should they spend their entire allowance even before the week is over, you are not giving them one more cent.
Open a bank account. Kids love having their own savings account as it makes them feel very grown-up. This also gives them an idea as to how banks work and what compound interest means. When they realize that their money will increase if left untouched, they will be inspired to put in more. So rather than spend any allowance left over at the end of the week, they can deposit that amount into the account.
Play games. Learning wealth creation can be fun when you throw in games like Monopoly, which stimulate the mind and motivate players to find ways to increase their money. Set aside one weekend for everyone to get together for some old-fashioned but educational entertainment.
Warn them of the dangers of misusing credit cards. Tell them that credit cards are not a bad thing, but if used unwisely, they could mean a life of debt and misery. Make them understand that you dont wish to see them leading their adult lives homeless and saddled with debt.
Let them set their own goals. If your child says, I want to have $20,000 in the bank by the time I graduate from high school, praise him for his goal and then map out a strategy for how he can get that amount and possibly much more before he gets his high school diploma.
Lead by example. Children will appreciate the value and appeal of wealth creation if their own parents practice what they preach. Be a consistent role model your children can look up to.
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