12 Jan Why you should talk to your kids about money
In my years of business coaching and mentoring, my primary passion has been building generational wealth and a legacy of wealth within families and communities. This means changing the global conversation about money, how it’s created, and how to start the education at a much younger age. Face it, most education is focused on industrial age models of “getting a job” rather than creating a big vision.
Because of this passion, I’m often asked what types of investments parents should be making for their children. Particularly, what is the best thing that you can do for your child’s financial future?
My answer is different than most you might hear in traditional financial circles.
NEVER PAY YOUR KIDS AN ALLOWANCE.
The best investment you can give your child is to teach them the value of entrepreneurship and the way that every economy in the world works. Instead of paying your child an allowance, design exercises and practices that are truly focused on basic finance.
One way you might do this is to sit down with your child and organize some basic household tasks or chores such as doing the dishes or cleaning the table. Work with them to assign a value for each one of these tasks. Each week as they complete the tasks, pay them the amount minus a small percentage that goes into a savings account specifically for them. This deduction functions a lot like taxes or accounts they’d have in the real world.
As your children get older, add a bit more to this model, including how to manage a bank account, expenses that might make sense given their age, or things that they’d want to buy.
Why do it this way? Not only does your child learn the importance of how economy works, but they also understand the value of their own work and services. The training and influence to focus on traditional education and the “job model” can be changed in just two generations with the right shift in conversation.