Every parent wants to raise kids who will be wealthy and manage their financials well. The best way to raise kids with a wealth mindset is to be a family in which good financial management is part of daily life. It is best if your family is also wealthy, but it is not necessary.
I grew up in a very simple family, you could even say a struggling family, with 5 children, and most of us are in a very stable financial status. My dad, who worked very hard all his life and was the money manger it the house, taught us very well. My family is proof that you do not have to be rich to raise kids with a wealth mindset. I think that if my dad could do it, you can too.
Here are my parenting rule about money, saving, investing and raising children who know their way through financial management.
- Teach your kids to love money, use money wisely and to manage money well – they will need those skills for a long time. First, you have to do it yourself. Kids who grow up in a family with money have better beliefs about money and use it differently to kids who grow up to a family that struggles financially.
- Give kids pocket money as soon as they can count to 10 – learning to keep money is an important skill that can be taught very early and the longer your children have time to practice earning, saving, investing and spending, the better they will be at it.
- Have a coin box in the house where all the coins go – it will teach kids to appreciate coins as something of value and demonstrate to them how little things accumulate over time. It will also show them how pooling resources can be useful where each person cannot manage alone.
- Never ever give money rewards for success at school – the real reward for success is self-confidence. The desire to succeed and be good at something is internal, while payment is external and your kids will always do better in life by being internally motivated. If you want to celebrate successes, use the money to celebrate it by doing something fun rather than giving it as a prize.
- Make sure your kids save some of their money – teach them the 10% rule, which will help them in life. Always spend 10% less than what you earn. It is not easy for kids to keep money, but money management includes earning, spending wisely and saving. No one can be financially stable without mastering all three of these. If this is not how you live yourself, make that a family project to begin with.
- Show your children how to measure their income and expenses – teach them the simple rule “your standard of living is the difference between what comes in and what goes out” as early as possible in life. Kids can easily record their income and expenses in their school diary or on the computer and gradually learn about government fees (like a driver’s license), insurance, utility bills, rent and so on.
- Teach your kids always to have something to look forward to – help them set financial goals and find things they want to have or do that cost money. This will help them understand that money is a vehicle we use to achieve what we want in life and that having money without using it makes it worthless.
- If your kids want something that is beyond their reach, use this as an opportunity for them to learn about borrowing, loans and interest. Help them out. Give them incentives to earn and save money and teach them to pay on time. When they are old enough, also tell them about leverage.
- Teach your kids to shop around before purchasing anything – saving money by comparing deals (not just prices) is a very useful money management skill. Teach kids to compare apples with apples and develop their concept of “value for money”. This includes focusing features, guaranties, service and suitability.
- Eliminate brand name from your shopping list – kids are just kids and they are highly influenced by what their friends have, but if they want you to buy then something because their friends have it, they will get hooked on the most dangerous “drug” of our society. Make sure the brand name is not a reason to purchase something but the use and the quality of it.
- Teach your kids the difference between an investment and an expense – the different between money that works for you and money the just goes away. Investment develops planning, patience and willingness to sacrifice something today to have much more tomorrow, all typical qualities of successful people.
I hope that reading some of these parenting “commandments” has helped you find the correlations between our parenting philosophy and the quality of upbringing out children receive. Having a parenting bible does not guarantee you will have a successful parenting experience, but it certainly is a good starting point that prevents you from re-inventing the wheel and second-guessing yourself endlessly.
Having a parenting philosophy is essential to good and successful parenting and making it into a bible with do and don’t commandments will make it easier for you to focus. In this series, I shared with you my parenting bible at the request of a participant in one of my parenting workshops. I hope it has inspired you to write your own.
This post is part of the series Ronit's Parenting Bible:
- Ronit’s Parenting Bible: Who’s in Charge?
- Ronit’s Parenting Bible: Love
- Ronit’s Parenting Bible: Food
- Ronit’s Parenting Bible: Babies
- Ronit’s Parenting Bible: Change
- Ronit’s Parenting Bible: Role Model
- Ronit’s Parenting Bible: Manners
- Ronit’s Parenting Bible: Gender
- Ronit’s Parenting Bible: School
- Ronit’s Parenting Bible: Money