Money matters for parents and teenagers.
I just got back from attending the most enlightening and educational conference on wealth building and building your business. Whilst there, I got this sinking feeling in my gut about how illiterate I was about money, and I’m happy I decided to do something about it.
One of the most rewarding parts of the weekend for me, was networking with people who have taken the time to educate themselves with regard to finances. One of the lessons I walked away with is this: “It doesn’t matter how much money you make, it’s what you do with it that really counts.”
I recently met a couple who shared that one of them earned $5.00 an hour and the other $8.00 an hour when they first got married. Despite that meager income, they had managed to save enough to buy their first home, then gone on to invest in multiple homes. I was really impressed and moved by their honest and humble attitude. Their gratitude for what they had accomplished was enormous.
It got me thinking how many of us complain about all the stuff, “toys” we have or don’t have, when we are so abundantly blessed.
I decided to share some of the insights I’ve gained, not only from the conference but even as I interview experts for my upcoming book, Teen Talk. Don’t Even Think about Raising Teens until You’ve Read This Book!
1. Educate yourself and your teens
I learnt this weekend that the number one drain on a family’s finances is IGNORANCE. How many of us are happy to just hand over the financial decisions to our financial advisor to make for us. It’s good to involve advisors but I am convinced, no one will love or take care of your money like you. Lots of people left their hard earned money to well-meaning investors and experts to invest for them, only to find out during the down turn of the economy that their nest egg was lost. Make sure you understand all the investments you are being advised to make and actually look at your financial statements when they come in. Not only that, but take the time to discuss money with your teens. Teach them even as you learn, so they don’t repeat the mistakes you’ve made.
2. Discuss your family values and principles
Be clear with your teens about what is important in life, and that money and possessions don’t create happiness. Teach them about the value of integrity, that good people are even more successful, than those who are simply wealthy. It’s important to actually live these principles and not just say them. Teens are able to see through this. I meet families regularly who depend on government assistance for health insurance etc. and I totally understand when people genuinely need this help. But it’s very sad to see families who have the latest cell phones and tablets and designer clothes, who still live off of public assistance. Perhaps they don’t realize is that their teens are watching and wondering and learning from them how to “game the system.” Unfortunately this creates an entitlement mentality which will ultimately harm your child and rob them of independence, as they grow older and expect that everything should be handed to them.
3. Teach teens about having a spending plan.
Lorraine Conaway from Conaway and Conaway, my personal friend and financial advisor says to avoid using the term “budget.” The word budget quickly invokes thoughts of deprivation, and the tendency to not follow it. A spending plan is more empowering. You are in control you get to decide how to wisely allocate your money. It’s good to teach your children about saving the first 10 percent of their allowance and of course to give 10% or a portion that you both decide on to charity. This is a valuable lesson, that will become a habit if learned early enough, and leads to an easy way to save and invest, and teaches your children about giving to others as well. Show them the value of compounding interest. Money invested wisely over several years leads to greater rewards. A spending plan also teaches us and our teens to live within our means and to avoid buying “shiny objects and toys”, just because we want them. As Judge Lynn Toler said to a young couple breaking up because of money issues, “If you can see all your money, you are not doing it right. The only people who should be impressed with your money are the people in the bank where you keep the money.”
4. Create “Money Rules.”
Money rules are literally principles you have adopted for how you live your financial life, after you have educated yourself. These rules encompass your core values, beliefs about money, and guide you in all your financial decisions. Some good money rules for a teen in college for example would be for them not to sign up for a credit card, without checking in with you first. Another will be teaching them not to make impulse buys. Teach them to stop and think, “Do I really need this? How can I afford this without getting myself into debt?” Money rules will obviously depend on your family values and when learned early can prevent unnecessary pain and heartache.
5. Be comfortable around Money.
Most of our generation of parents grew up hearing phrases like “Money does not grow on trees,” and “we can’t afford it” and the worst is that “rich people are bad.” This is not only unfortunate but is very toxic thinking. If you think such thoughts, you don’t even try to reach your highest potential. Your teens are defeated before they even make it in the world, because they have a wrong mindset around money. Can you imagine all the good you could do in life if you had money? It is true, money does not create happiness, but neither does the absence of money. Money earned honestly and used wisely to bless others and to provide for your family does bring happiness. Money is not evil. It’s the love of money that is the problem.
As we start a New Year, let’s educate ourselves about money. Look for experienced advisors and work with them to improve your financial future, and that of your teens. Take responsibility and create a spending plan for the family. Teach your teens the value of saving and investing from early on in life. Be wise in how you use your money. As Judge Lynn Toler says, “the fact that you can buy something doesn’t necessarily mean you can afford it.” Our teens are watching, let’s empower them to take charge of their financial futures.