Teach your children today or live with them tomorrow.
Are you concerned about your kids moving back home after college
because they're in debt up to their eyeballs? You should be!
More kids leave college these days for financial reasons than
academic reasons. Even those that do graduate have large amounts
of credit card debt and school loans following them into their
new careers. The good news is that this situation is preventable.
Albert Einstein once said, "Setting an example is not
the main means of influencing another, it is the only means."
If the statistics are even partly accurate, parents in America
are setting a terrible example for their kids. For the first
time in history, Americans are spending more than they are saving.
Consumer debt is at an all time high, but it wasn't always
this way. Back before credit cards became the accepted way to
make purchases, people bought with cold, hard cash. This is the
example that was set for kids that were born prior to 1950.
So what happened? In 1950 Diners Club and American Express
introduced the first 'plastic money' because having a credit
card created a type of elitism for the rich. Over time, what
the rich had became highly desirable by those who wanted to be
rich, or at the very least, look rich. Yet Mr. Thomas Stanley,
in his popular book, The Millionaire Next Door, shows that the
truly rich do not necessarily have the things that the majority
of society thinks they have.
So, how is this translating into young adults (under 24) being
the fastest growing segment of our population filing for bankruptcy?
It's partly because children aren't exposed to money and family
finances until they are on their own. The main reason for this
is that parents say it is easier to talk to their children about
sex and drugs than about money. They also often don't have the
knowledge themselves and simply lack the tools and resources
to teach their kids how money works. This means that children
often move out after high school and are faced with a world full
of money but no idea how to use it. Dollar bills rarely come
with instructions!
Here are some ideas that might help:
1) Cut up your credit cards and live within your means. If
you uttered one, "but..." then you're not ready to
make financial freedom a priority.
2) Start saying "NO" to your kids and mean it when
they constantly ask you for this and that. Remember, the goal
is to raise self-reliant adults.
3) Bring your children into your financial life immediately.
Show them the family bills, let them help you write checks and
pay bills online. Let them participate in family investment decisions.
Make financial goal setting and budgeting a family affair. If
everyone in the family agrees on a goal, it's easier for the
whole family to do what it takes to meet that goal.
4) Give your child an allowance but do so based on the money
you're already spending on them, not for chores or grades. Let
them learn through their own successes and mistakes while they
are young and you can guide them. The great little book called
Allowance Magic by David McCurrach explains the whole concept
in simple, easy to follow terms.
5) Give your children books about money, send them to Camp Millionaire,
encourage them to start a little business, look up stocks, etc.
6) Teach your children about Money Jars. Money has different
'jobs' in our lives so teach children to split their financial
resources into these different jars every time they get money:
Living, Saving, Investing, Education, Play and Donation. The
jars need to be clear so that the child can see the visual accumulation
of their money. If you have older teens, set up multiple savings
accounts at the bank. Remember, human beings are creature of
habit so let's get great money habits started early!
7) Finally, get your own financial priorities in order and
the whole family will benefit.
For more information on our Money Camp programs and the
books and products mentioned here, please give us a call 805-957-1024
or visit our website at Creative Wealth.
