4 Millionaire Money Habits to Teach your Kids
As children, many of us always wanted to be rich or work a profession that provides a lot of money. This is a great trait that young children have. It shows ambition and they want to develop throughout their life and career. That being said, there is a gap or a misconnection for most families. By the time teenagers graduate college, their career path changes, or they aren’t well informed about personal finance. A big reason for this is due to the high school curriculum not involving these critical tools to know and understand.
The key to raising future millionaires starts with teaching them good money habits young. You should be teaching your children about money from a young age the same way you teach them about cleaning, personal hygiene ect… Many families keep finance topics away from their children but involving your children is best practice. This creates a sense of comfortability when speaking about finances.
In this blog, we will be sharing 4 habits to teach and practice with your children to ensure that they are prepared, educated, and determined to become wealthy and financially free. This is extremely important considering that there may not be any social security for their generation and potentially our generation as millennials.
Saving
The most important thing to teach your child first is saving. Saving is the gateway to all other investments. By teaching them this at a young age, they have already won half of the battle. You can’t invest any money if you don’t have any money to invest.
Whenever your child comes across some cash, whether it’s for a holiday, birthday, or allowance, get them into the habit of immediately putting a portion aside for savings. There are multiple ways you can save for your child. You can buy them a jar, piggy bank, water jug, or open them up a savings account. For small children, seeing the money is usually something they like to see so a jar or something insight would be best. For older kids, open a savings account and go over the different benefits that each account has such as interest, or any extra perks that come along with it. It’s a great teaching opportunity to talk about the difference between traditional banks, online banks, and credit unions. I recommend an ATM card opposed to a debit card or any card they can swipe freely.
By educating your child about saving and personal finance, you’re helping your child think of the bigger picture. There are also some techniques that you can follow as the parent that can elevate this practice. Teaching your children about growing their money and also participating can be the first step you take in teaching them entry-level investing.
Growing
Growing their money may be a tougher concept to explain to a young child. For little ones, you can use examples of things they will know to correlate it to investing or making your money grow. One major technique that tough me about making my money grow and building my passion for finance is the deal my Grandma and I had as a child. At the age of 8, my grandmother opened me a savings account and we made an agreement that she would match $1 for $1. This is the point where I started to understand the benefits of saving and earning interest on the funds that I invested.
Now, I know what many people would say – maybe you don’t have the money to do this, but this is just one example. You can match .25 cents for every $1 they save and that will add up tremendously. It’s not about how much you match, it’s about teaching them a concept so they can understand the value of compound interest, and leaving their money somewhere and it growing by being patient. This correlates to leaving your money in an investment over time. Statistics show that the ones who leave their money in the market for the long haul have the best returns. This builds great habits that will be embedded in them FOREVER.
Spending
We are in a new world where living beyond your means is becoming popular and a society’s norm. This trend has primarily been created due to social media and the presence you want to perceive amongst your peers.
This is one of the most important topics your children need to understand. You can thank me later!! Kids love to spend their parent’s money on material things. Although there is nothing wrong with buying nice things, they need to be taught to spend only what they can have, or what they can afford to pay back within that month so no interest is charged.
Teaching your kids to spend responsibly and efficiently creates good habits that will be carried out for the rest of their life.
Giving
Giving back to the community is an action that is commonly forgotten when teaching your children about gratitude, and being humble. At an early age, you should get your children involved in volunteering their time or even donating to a cause they believe they can make a difference. This shows them that there is much more to life than material things. This also shows them to give back and be a leader/mentor in the community. Not only does this cause your child to be humble, it also helps embed great value and morals into their day to day lives. Greed is something that will NOT be a part of their values and morals by getting your children involved with giving back.
For more information about investing, budgeting tips, and personal finance visit www.moneythemillennialway.com