1. Money is linked to effort
No one earns money except by human effort. This is the first financial lesson that should be taught to young people and it is probably the most important. We live in an age and society of great abundance—more so than at any time throughout the whole of human history. As parents, we endeavor to provide all we can for our children. Although guided by good intentions, too often, we provide so many comforts and gifts that our children develop an unrealistic set of expectations. Parents know that all the comforts and gift that are provided to their children are brought about by the efforts of the parents. However, children generally do not observe that. To avoid the potential of spoiling a child, we parents must take an active role in linking money to effort in the mind of the child. I, personally, abhor the use of the word allowance. An allowance is given to someone regardless of what work is done. Rather, I encourage parents to provide fees or commissions to their kids for performing some basic household chores. These fees can start to be paid as early as 3 or 5 years old. The sooner we parents can start to make the mental connection that wealth comes from hard work, the better off your children will be.
2. Success comes to those who spend less than they make.
It should go without saying that spending more than you earn will lead to eventual financial failure, but spending all you earn will lead you financially in neutral, never allowing you to build forward momentum. Teaching kids at a young age that saving and investing is invaluable. Building a habit of consistent saving and prudent investing in one’s teens almost guarantees that individual will be a millionaire in retirement. Teach your kids to consistently save at least 10 percent of their income throughout their lives and they will be financially free.
3. Success necessitates making choices and setting priorities.
We will never have enough money to satisfy all of our desires. Children must be made to prioritize their spending. Like we adults, children should be allowed to manage small budgets and make choices about how to spend that money. If your daughter wishes to purchase that designer handbag, she may find that she doesn’t have the money to go to the movies with her friends at the end of the month. Kids must be made to know that, you cannot have everything you wish for, but you can enjoy some very nice things.
4. Money can be mobilized to achieve goals.
People are often not blessed with patience. One of the reasons many of us struggle with debt is because we are unwilling to postpone buying an item until we have the money. But kids need to learn that money can be amassed with effort, time and care. Take time to work with your kids to help them find something they want and give them a time line to make it happen. During the weeks and months leading up to achieving the goal, give your children encouragement and keep them motivated. By pursuing a goal through to achievement, it teaches your children to live beyond the moment and plan for the future. In addition, it shows them that consistent effort exerted over time can result in fantastic results.
5. Money not spent can be used to make the world better.
It is only by limiting your spending can you use of a portion of the remainder to give to others. Whether it is to give to your favorite charity or give canned goods to a struggling family next door, you can only give to others what you have not consumed yourself. Excess income is a personal power that can change the world. Teaching your kids about giving helps them become a force to do good. The first four skills are about being a good money manager. This skill is about being a better person. Give your kids the gift of making an impact and of becoming a person worthy of respect and self-worth.
