Throughout life, we experience several momentous, and often underestimated, life events, such as retirement, purchasing a home and relocating, and many more. One of these events is seeing your kids leave the nest as young adults ready to take charge of their own paths. At the start of this year, Dave and his wife sent their son off to college. He shares his experience.
Time to let go
For most parents the idea of letting go of your grown children can seem like a daunting prospect. Still, it’s a part of life that we inevitably have to face. The best we can do is to prepare them for their entry into the world as independent adults. One invaluable lesson that will set your children on a trajectory of success as adults is how to think about and behave towards money.
“So many individuals, regardless of their academic intelligence, effort or even income, tend to achieve no greater financial success than their parents or peer groups.”
– Dave Fisher, Destination Wealth
In his video, Dave shares key tips to help you give your kids the financial education that will equip them to be financially successful adults:
The 3 E’s of teaching your kids about money
1. Lead by EXAMPLE
In Destination Wealth, Dave refers to a study that discovered mirror neurons, which are neurons that fire when we perform an action and when we see others performing the same action. These neurons lead us to mirror others’ actions, which is usually the case with kids.
Kids learn by copying those around them – usually their parents and peers. This behavior then seeps through into how they think about and deal with money. This is not always a voluntary reaction, and its innateness is what makes it difficult to unlearn. For this reason, we as parents need to rethink how we think about and behave towards money. If we can align our financial context with one of success and prosperity and become financially successful, our children are likely to adopt this mentality and start their lives as grown-ups pre-programmed for success.
2. EMPOWER them with money
Dave explains that placing financial responsibility in children’s hands is a must to teach them how to work with and value money. Giving your kids a weekly or monthly allowance will empower them to make financial choices with real consequences.
For example, your youngster wants a new, popular toy. They also want to visit the cinema to watch a movie with friends. You hand them their allowance and leave it up to them to decide what they want to prioritize. Immediately, your child learns the value of possessions and activities. At the same time, they become familiar with what their money can and cannot buy. This is a profound life lesson that they will carry with them throughout their lives as adults.
It’s important to understand how to behave towards giving your kids an allowance as a parent. This article, by Tanni Haas (Ph. D.), shares useful tips to introduce allowances into your household.
3. ENCOURAGE kids to budget and save
“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.”– Thomas T. Munger
It’s time to pull out the ol’ tried-and-trusted piggy bank to teach kids the value of setting money aside so that it accumulates and can be used for something that they really, really want later. The sooner kids learn the value of budgeting and saving, the sooner they will attain necessary tools needed to build wealth as adults, including self-discipline, smart spending habits and delayed gratification, among others.
Teaching kids to manage their money according to a plan and to set aside money to save will instill values that will serve them well later in life. You can start with your young kids by introducing three jars, labelled ‘saving’, ‘spending’ and ‘sharing’. Upon receiving money, encourage your child to divide the money between the three jars. ‘Saving money’ is for larger purchases; ‘spending money’ is for smaller items, and ‘sharing’ is for charity.
Read Kalen Bruce’s article on teaching kids of all ages how to budget and save money.
Thriving, money-savvy adults in the making
To see your children turn into thriving adults who are financially successful and capable of making their own way is a parent’s dream. To see this dream turn into reality, it’s time to become hands-on about our children’s financial education. As Dave says, “enable your kids not only to survive but to thrive” by educating them about money from early on. “One of the greatest gifts you can give your kids is to be responsible empowered adults around money.”
Grab your copy of Destination Wealth to fuel your household’s financial success.