Sending our kids off to college is a monumental step, for both parent and child. Freedom, independence and discovering who they are, are all part of the college experience. With this huge step comes added responsibility, with the hopes that we have equipped them with the life skills necessary to succeed.
One of the most important life skills we need to teach our kids is how to be smart with money. I’m not suggesting that money buys happiness, but I am saying that not having money can create heartache and stress, neither of which we want our children to experience.
So, how do we set up our kids for financial success? First, get comfortable yourself with money.
There are many topics to cover around money, all of which are important. Here are three you must share with your kids before they head off to college. In the interest of keeping within my allotted word count, I’ll keep the details short, but this will get you headed in the right direction.
Rule 1: How to properly use a credit card: Credit card debt can wreak havoc on their life, so it’s imperative they understand how to use one properly. Using a credit card can help build credit, which will improve one’s FICO score, so I do suggest they use it. BUT, and here’s the huge but, they must pay off that card in full every single month. I suggest they buy gas or groceries with the credit card, then pay in full. Show them what happens when they don’t pay the balance off and they incur interest charges. There are many online calculators that you can use to show them how much an item actually costs if they pay only the minimum balance. Now is the time they create the money habits that will make, or break, their credit history, so teach them as soon as they get a credit card. They should never purchase anything on credit they won’t be able to pay in full when the bill arrives. The only exception would be an emergency, such as replacing a flat tire or putting food on the table…and I’m not talking beer and pizza.
Rule 2: The Power of Savings: This is where the wealth begins- understanding how to save and the discipline to do it consistently. Just as the interest on a credit card can compound and create a downward spiral, the compounding interest on an investment/savings account can spiral sky high. When I show examples of how compounding interest works, I always, and I mean always, get a look of shock and amazement. Then I’m asked, “where do I start?” Again, check out the online calculators for “compounding interest.” Make the savings automatic, every month. They are blessed with the gift of time- start them saving early and watch their wealth grow!
Rules 3: Find a cause greater than yourself and give back: Being wealthy for the sake of being wealthy is a shallow existence. There are countless millionaires who are miserable. Be an example to your kids and find a cause and donate. Giving is, by far, a greater reward for the giver than the recipient. Teach them to open their wallets, which in turn will open their hearts.
Tori is live with Patti Handy discussing her new book "Money Rules 101" – KHTS AM 1220
Posted by KHTS Radio on Wednesday, February 8, 2017
Do your kids show an interest in entrepreneurship? Are they creative in their thoughts when it comes to making money or serving the world? Let’s feed this and inspire them!
If our kids realize the endless opportunities that are available to them, I’m convinced they will do greater in life. Not just financially, but emotionally. Limiting beliefs are part of our everyday life, regardless of age. The sooner they/we release these beliefs and understand they can dream big, the better!
So, how do we as parents inspire them?
Begin by opening their minds to the endless opportunities and discuss how our limiting beliefs hold us back. Give them permission to think and dream big, without judgment.
Let them know that big dreams require perseverance, the right mindset, skills, and the ability to ignore the negative noise around them. Encourage them to read, read and read. It’s a proven fact that reading has a direct correlation to financial wealth! (Did you know that Warren Buffet spends 80% of his day reading and when he started his investing career, he would read 1000 pages a day!?)
Start by brainstorming with your kids, regardless of age. Don’t judge, just let them think and speak out loud. Have them write down their current skills and talents. What do they enjoy? Let the creative juices flow.
How can they utilize those skills and talents to generate income?
Feed this process with conversations, preferably on a regular basis. Let them know you support them and you are proud of their boldness. Equally important, let them know that failure is just one step closer to success. Failure is a good thing! There isn’t one millionaire on this planet that hasn’t failed…many times!!
Enjoy the process with them.
I have an entire chapter on Entrepreneurship in my new book, Money Rules 101- Master Your Money Before it Master You. It will be released in February, but you can pre-order now! Learn more about the book and all the topics I cover here.
Believe me, I understand your struggles.
I have a teen myself- actually he just turned 20 years old (gulp) and I teach this stuff, and yet some days I just don’t get through to him.
Teens love to be with their friends, which mean they are out and about…A LOT. This generally suggests they are eating, drinking coffee or going to the movies, which all require money. It’s amazing how a few bucks here and a few bucks there add up to a boatload of bucks!
I take every opportunity (I call them teachable moments) to have a conversation about money choices. Sometimes, this comes at a time when he finds himself out of money and wonders where it all went. Sometimes, he wants to buy a big ticket item and he’s not sure how he’s going to save for it.
All great teachable moments.
My Online Money School is a great way to have many teachable moments with your teen or college bound child (young adult). These short videos cover a multitude of topics, all invaluable for their financial peace and prosperity.
Watch these videos with them to get the conversation started!