HOW TO EDUCATE YOUR KIDS ABOUT WEALTH AND MONEY MATTERS.
“Work hard, save heaps and avoid debt”. These are the three things most people learn from their parents about wealth and money.
But, what about how to become a millionaire?
If you want your children to become financially independent, how can you educate them to build wealth in a savvy way?
We spoke to a Binvested staff member and mother of two for some tips on how to raise entrepreneurs instead of wage-earners.
FILLING IN THE GAPS OF THE EDUCATION SYSTEM.
Helping kids develop a can-do attitude is essential in any sort of education system.
It is strange then that kids are taught next to nothing about building wealth at school.
Managing finances is usually something taught at home – but most people teach their kids to be workers rather than to build wealth through investing.
MUM INVESTOR HAS LIGHT-BULB MOMENT.
This Mum investor has more than ten properties in her and her husband’s portfolio.
From the time they bought their first investment property, she has shared the journey with her children. She says, they may not fully comprehend what their parents are doing now, but things will start to make more sense as they get older.
She recalls a moment when Nathan completely changed her mindset about teaching her kids good financial habits.
Like many parents, she had been giving her kids points or money if they did certain chores.
“Nathan said to me, that means you’re teaching them to be a worker for the rest of their lives,” she says.
“He said, you should be teaching your kids to think – and pay them when they’re thinking about something outside the box.”
“That way you’re teaching them to become an entrepreneur.”
Nowadays, she pays her kids to do chores so they can appreciate the value of money, but she also uses a merit system to encourage self-development.
Every time one of her kids reads a novel they earn a tick. If they read a book that fosters self-development, they get extra ticks. Those extra ticks go towards the purchase of a new book.
In this way, her kids are being rewarded for educating themselves. They are setting up a practice of lifelong learning and growing their brains.
TIPS FOR EDUCATING KIDS ABOUT WEALTH AND MONEY.
Here are some tips that our resident mum has shared from her own experience of teaching kids about money.
1) MAKE IT AGE APPROPRIATE.
You don’t want to bog down your child with ideas they don’t understand, otherwise they will switch off. Lay down the groundwork when they are young by sharing ideas they can understand. Build on this as they get older.
2) GET THEM READING.
Kids learn through stories. Fables have always been an excellent way to teach kids certain themes and ideas. When they are older, get them to read self-help books about building wealth and being successful.
3) ENCOURAGE LEARNING.
Reward them in a systematic way for every self-help book they read and every clever idea they have.
4) TEACH THE VALUE OF HARD WORK.
Pay a set amount for different chores around the house. After a while, they will begin to understand the idea of earning money.
5) ENCOURAGE INDIVIDUALITY.
Try to teach them that following the herd isn’t always the best idea. Most successful entrepreneurs have achieved what they have because they have thought outside the square.
6) HELP THEM LEARN FROM OTHERS.
Showcase the success stories of famous individuals, and help your child learn about what others did to become successful. Teach them also to learn from the mistakes of others (and themselves too).
7) LEAD BY EXAMPLE.
Share your own wealth creation journey with your children. Remember to keep things age appropriate and build on the details as they grow older.
8) DEVELOP A SYSTEM FOR MANAGING FINANCES.
Explain how to budget by splitting their allowance into three, and teach them to save by putting one third of their money away for when they are older. Encourage them to pay for part of their extra-curricular activities with the second portion. Allow them to choose what they want to do with the remaining third.
9) DON’T BUY THEM WHATEVER THEY WANT.
Don’t buy them gadgets just because their friends have got them. Teach them to understand that you work hard to earn money, and that owning luxury items is a privilege, not a necessity.
10) TEACH THEM ABOUT VALUE FOR MONEY.
When they do want to buy something, encourage them to get a good price by shopping around and taking advantage of sales. This will instill the idea of value for money.