Our schools teach the fundamentals we all love; reading, writing, math, science and history. What concerns me is our school system lacks some of the ‘street smart’ skills that kids will need to be those successful leaders, healers and entrepreneurs.
As parents, we must take teach our children ‘money smarts’.
Can you imagine how empowered you would be if your parents taught you how to balance a checkbook, invest in the stock market, manage credit card debt, start a business, or the power of compounding interest?
If you were one of the lucky few whose parents did teach you money skills, consider yourself blessed. The present economic situation is a perfect time to teach our kids the importance of money management and the need to respect money for what it is, and isn’t.
So, where do we start? With the basics. Depending upon your child’s age, you can start with talking about money. Most of us don’t discuss the family’s financial situation at the dinner table. I propose you do. I think it’s important that children understand what is happening, good or bad, with the money being earned.
Don’t get me wrong here; I’m not suggesting you tell your kids your annual income or the balance of your investment portfolio. What I am suggesting is to bring the kids into conversations regarding ways to save, creative ways to earn additional money and what to spend that money on. Involve them with decisions on vacations, donating to a charity or cause, or how they plan to buy their first car.
From middle schools to teens, open a savings account and teach them the importance of monthly deposits, regardless of the amount. Create in them the healthy habit of making that deposit every single month. Compounding interest and time are on their side and simple, small deposits made regularly add up to huge money later.
Did you know that $4 a day, 5 days a week invested at 10 percent (historically, the average in the stock market) turns into $1.3 Million in 50 years.
Introduce the concept of a budget, although I don’t care for that word. (Like a diet, it implies I have to give up something). It is about compromise and being aware of where the money goes, so rather, suggest this: what is priority, given the income?
Teach them to live within their means and the dangers of credit. If our kids can understand this now and realize the consequences if they don’t, it will make for a peaceful and prosperous future. As parents, we know there isn’t anything we want more in life than to see our children healthy, happy and at peace.