This week, we have a guest post by financial expert and author, Elisabeth Donati. She has written the book, “The Ultimate Allowance,” is the founder of Creative Wealth International, LLC, and is the creator of Camp Millionaire and Creative Wealth for Women workshops. In this article, Elisabeth shares with us how to empower our children financially.
You may be thinking to yourself, “What do I do to raise adult children who move out successful so they don’t ever have to move home later?” In other words, you’re looking for a way to make sure they grow up to be financially, self-responsible adults.
I’m happy to report that there are three relatively simple keys to ensuring that your children leave home knowing what to do with the money they will be making in their future. More young adults are not only leaving college these days because of financial problems, such as student loans and credit card debt, but they are also moving back home after they graduate because they simply don’t make enough money to go it on their own.
The primary cause is simply that kids don’t have a clue what to do with their money, or anyone else’s for that matter. Most of them are good at spending money, but it’s a rare 20-year old who understands the dangers of credit card abuse or the power of saving and investing. Heck, for that matter, most parents don’t understand financial basics either.
Imagine this scenario… Your son (or daughter) comes to you one day and says, “Mom, I have decided I really want to grow up and become a major league ball player.” You say, “Wow, that’s cool. Good for you,” and you go back to doing what you were doing. Your child looks at you and asks, “So, would you get me a ball so I can learn how to throw it?” You say, “Maybe later.” He says, “What about a glove and a bat?” You respond, “Nah, I don’t think so.” He’s frustrated at this point and asks, “OK, but will you at least teach me the rules?” You say, “Oh, you can learn the rules later.” Now he is really angry; he’s fuming inside and feels stuck. Finally he gets really mad and yells, “But MOM, how am I ever going to become a great ball player if I don’t have a ball, bat or glove to practice with and I don’t know the rules?” This is what parents do, most unknowingly, to their children everyday in regard to money. We grow them into adults but rarely give them the equipment or rules to practice, and get good at “The Money Game!”
Let’s look at three simple steps you can take to empower your children with the tools, knowledge and practice they need to grow up financially free:
FIRST, you must set the best example you can for your child. Since human beings learn best by example, it is critical that you first examine what you’re teaching your children through your actions because they really do speak louder than words. How can you expect your child to save and invest if you don’t? How can you expect your child to grow up with a healthy understanding of money if you don’t have a healthy understanding of money? How can you expect your children not to use credit cards if the only way they see you buy things is with a credit card? The important thing to remember is that children learn from us in three ways: by what they see us do, by what they hear us say, and through the experiences they have with money. Just know that they are always watching and learning from you in ways you probably aren’t even aware of.
If you’re like many adults who don’t understand money, you’re not alone. You weren’t taught when you were young either, however, now’s the time to make a commitment to educate yourself. There are books and seminars everywhere.
If you’re doing well financially, good job. Keep asking yourself how you might ‘show’ your kids about money with your daily routine and include your kid’s friends. Kids often learn better from people other than their parents, so look for opportunities to influence all the kids in your circle.
SECONDLY, talk to your kids about money. Take every opportunity you can to open up a line of conversation about family expenses, credit cards, debt, interest, investing, business, real estate, the stock market, financial beliefs, etc. Some examples of when to talk to your kids about money are:
• When you take money out of the ATM, talk about where the money comes from, why you can only take out so much, etc.
• When you pay for the groceries with a credit card to get points so the whole family can go on vacation, make sure they understand the importance of paying the bill off EVERY SINGLE MONTH!
• When you pay bills, let them help you write checks or pay the bills online. Teach them how to check the accuracy of each bill.
• When you deposit money into your bank, visit your investment advisor or accountant, take your child along.
The worst thing you can do is assume that someone else is teaching your child about money. What children learn from parents who don’t talk about money is that talking about money isn’t OK. A healthier way to look at money is simply as a tool to reach your dreams (a Creative Wealth Principle); it doesn’t mean we’re better or thinner or smarter than others. It’s simply a tool.
THIRDLY, give your child an allowance, but not the usual kind where you pay them money just because they may be breathing. In The Ultimate Allowance, you learn how to take the money you spend ON your child and run the money THROUGH them instead. If you consider that it takes around $275,000 to raise a child, just imagine how good your kids will get with money by getting to practice with even a small portion of that money. By providing our children with plenty of opportunities to make financial choices—good and bad— they’ll graduate from Money 101 before it’s too late.
Just remember that human beings learn best by example. Your children are watching what you do with your money, listening to what you say about money and internalizing all the experiences they are having with money, so pay attention to the example you are setting. And lastly, please talk to them about everything financial. It’s the best investment you can make in your child’s financial future and we promise it will ‘pay off’ in the end!
For more information on all of our unique financial literacy products and programs, please visit The Ultimate Allowance and Creative Wealth International or give us a call at 800-928-1932.
Elisabeth Donati is the owner of Creative Wealth Intl., LLC and creator of Camp Millionaire, a unique financial intelligence program for youth. She is an expert in teaching the basic financial principles everyone needs in a way that is engaging, empowering and fun. She has a passion for empowering women in her Creative Wealth for Women program and is the author of The Ultimate Allowance and the weekly ezine, Financial Wisdom with a TWI$T. For information, visit http://www.creativewealthintl.org
To learn more about Elisabeth and her products, visit her websites:
www.CreativeWealthIntl.org
www.CreativeWealthPrinciples.com
www.CampMillionaire.com
www.UltimateAllowanceBook.com
www.CreativeWealthForWomen.com
www.CreativeCashForKids.com
Thanks Elisabeth!!