Talking to Your Kids About Building Wealth

The primary task of parenting (besides loving, of course) is preparing your kids for independence. You teach them about life and give them the tools and the wisdom to make the most of their talents and their opportunities.
It's easy when they're young. "Look both ways before crossing the street." "Study hard." "Do your best." But as your kids get older, the issues get more challenging -- sex, drugs, and alcohol come to mind -- and the conversations get a lot more difficult.
Yet too few parents are having the one conversation that's vitally important to their children's future, and which -- when compared to talks about sex or drugs -- is surprisingly easy to begin: The one about building wealth.

Allowance Tips: Good Money Management Begins with an Allowance

Teach philanthropy at an early age. A portion of a child's allowance — 10 percent — should be allocated to charity. Encourage children to participate in canned good, clothing, or toy drives for charities. Help them to respond to natural disasters, such as hurricanes or earthquakes, outside their community by donating money to help.

Teach saving at an early age. It's important to put something aside for the future. Teach your
children that saving isn't for leftover money. Both the allocations for charity and savings should be made before any discretionary spending takes place. As with the donations to charity suggested above, the child should be encouraged to set aside the same portion of allowance — 10 percent — for savings. Children should have savings accounts by the time they're 8 years old. If older children don't have savings accounts, remember it's never too late to start a savings account for a child.

Encourage an entrepreneurial spirit. If children have a special goal, encourage them to find ways to earn the necessary funds. Don't create unnecessary jobs just so they can meet the goal. That's the same as giving them the money. Let them find a job and make the offer. If it meets a need and the price is right, hire them.

Never reward good behavior with tangible gifts. Goodness is its own reward. Your approval and words of praise should be sufficient. Paying for good behavior leaves parents open for juvenile blackmail. Parents don't want to hear, "I'll stop crying if you take me to the toy store," or "I'll come home on time if you buy me a new stereo."

Don't try to compensate your children for your own deprivation as a child. There are some purchases that signify changes of lifestyle and qualify as rites of passage. Allow your children the pleasure and pride that making those purchases for themselves can bring.

Teaching children financial responsibility can be an exciting and fun-filled experience. It's not always easy, but when parents are consistent, the rewards are immeasurable. Parents will be giving their children skills that will benefit them for the rest of their lives.

When Is It Too Early For An Allowance?

Experts differ on whether or not allowances should be tied to household chores. Although many people say children will learn more about personal responsibility if they are NOT paid for pitching in around the home, others feel it teaches them valuable lessons about working and earning. You might consider paying your children for chores outside of daily duties, such as helping to garden or wash the family car.
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I give my son an allowance for his contributions around the house. I think it's a wonderful way to learn about the art of give and take. In life there's usually more give than take so when it comes to earning for giving I'm all about it.

Teaching by Example

Working from home has it's advantages besides financial and time freedom. Being home with your kids also teachs our kids how to live their dreams. Most families in my business community live life by example. They teach their kids to work smarter not harder!!!

My Top 5 Lessons For My Son:

1. Kids model what they experience. My son will follow my example and leverages his time and money.


2. Your career should be something you Love to do. The fact is that wealth is developed when you have passion in what you do.


3. Family is the most important part of life. Putting family first shows our children the meaning of life. The reason we are who we are is because of family and that should be praised.


4. The path you choose is your own. There's nothing more important in life than being your own person. I'm a huge believer in thinking for yourself. If I wasn't then I would be working for the man, wishing for my next break or something like that. In life there are followers and there are leaders. I'm a leader and my son knows this about me. Therefore he will follow in my footsteps and call his own shots!

15 Ways to Teach Kids About Money

15 Ways to Teach Kids About Money

Introducing Kids to Money Money gives people -- both young and old -- decision-making opportunities. Educating, motivating, and empowering children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend. Everyday spending decisions can have a far more negative impact on children's financial futures than any investment decisions they may ever make. Here are 15 simple ways to help educate children about personal finance and managing money:

1.As soon as children can count, introduce them to money. Take an active role in providing them with information. Observation and repetition are two important ways children learn.
2.Communicate with children as they grow about your values concerning money --- how to save it, how to make it grow, and most importantly, how to spend it wisely.
3.Help children learn the differences between needs, wants, and wishes. This will prepare them for making good spending decisions in the future.
4.Setting goals is fundamental to learning the value of money and saving. Young or old, people rarely reach goals they haven't set. Nearly every toy or other item children ask their parents to buy them can become the object of a goal-setting session. Such goal-setting helps children learn to become responsible for themselves.
5.Introduce children to the value of saving versus spending. Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money children save at home; children can help calculate the interest and see how fast money accumulates through the power of compound interest. Later on, they also will realize that the quickest way to a good credit rating is a history of regular, successful savings. Some parents even offer to match what children save on their own.

Allowance and Spending Decisions

6. When giving children an allowance, give them the money in denominations that encourage saving. If the amount is $5, give them 5-1-dollar bills and encourage that at least one dollar be set aside in savings. (Saving $5 a week at 6 percent interest compounded quarterly will total about $266 after a year, $1,503 after 5 years, and $3,527 after 10 years!)

7. Take children to a credit union or bank to open their own savings accounts. Beginning the regular savings habit early is one of the keys to savings success. Remember, don't refuse them when they want to withdraw a portion of their savings for a purchase--This may discourage them from saving at all. You can also introduce children to U.S. savings bonds. Bonds are still a good value, costing one-half their face value and earning interest that in some instances will be tax-free if used for a college education. Perhaps more importantly, when given as a gift, bonds will not be spent immediately, reinforcing saving and goal-setting lessons.

8. Keeping good records of money saved, invested, or spent is another important skill young people must learn. To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year. Establish this system for each child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.

9. Use regular shopping trips as opportunities to teach children the value of money. Going to the grocery store is often a child's first spending experience. About a third of our take-home pay is spent on grocery and household items. Spending smarter at the grocery store (using coupons, shopping sales, comparing unit prices) can save more than $1,800 a year for a family of four. To help young people understand this lesson, demonstrate how to plan economical meals, avoid waste, and use leftovers efficiently. When you take children to other kinds of stores, explain how to plan purchases in advance and make unit-price comparisons. Show them how to check for value, quality, repairability, warranty, and other consumer concerns. Spending money can be fun and very productive when spending is well-planned. Unplanned spending, as a rule, usually results in 20-30 percent of our money being wasted because we obtain poor value with our purchases.

10. Allow young people to make spending decisions. Whether good or poor, they will learn from their spending choices. You can then initiate an open discussion of spending pros and cons before more spending takes place. Encourage them to use common sense when buying. This means doing research before making major purchases, waiting for the right time to buy, and using the "spending-by-choice" technique. This technique involves selecting at least three other things the money could be spent on setting aside money for one of the items, and then making a choice of which item to purchase.

Buying Smart

11. Show children how to evaluate TV, radio, and print ads for products. Will a product really perform and do what the commercials say? Is a price offered truly a sale price? Are alternative products available that will do a better job, perhaps for less cost, or offer better value? Remind them that if something sounds too good to be true, it usually is.

12. Alert children to the dangers of borrowing and paying interest. If you charge interest on small loans you make to them, they will learn quickly how expensive it is to rent someone else's money for a specified period of time. For instance, paying for a $499 TV over 18 months at $31.85 a month at 18.8 percent interest means the buyer really pays about $575.

13. When using a credit card at a restaurant, take the opportunity to teach children about how credit cards work. Explain to children how to verify the charges, how to calculate the tip, and how to guard against credit card fraud.

14. Be cautious about making credit cards available to young people, even when they are entering college. Credit cards have a message: "spend!" Some students report using the cards for cash advances and also to meet everyday needs, instead of for emergencies (as originally planned). Many of those same students find themselves having to cut back on classes to fit in part-time jobs just to pay for their credit card purchases.

15. Establish a regular schedule for family discussions about finances. This is especially helpful to younger children--it can be the time when they tote up their savings and receive interest. Other discussion topics should include the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth. With teenagers, it's also useful to discuss what's happening with the national and local economies, how to economize at home, and alternatives to spending money. All of this information will be important as they take on more responsibility for their own financial well-being.