Investmen t In sigh ts
a nd formulaic, the reality for each individual often lies far from this.
The word “money” carries an important emotional wallop—one that
must be understood and embraced to achieve lasting satisfaction
with a financial management process.
Personal views about money stem from some of our earliest and
most basic life experiences. Individuals raised during the Great
Depression for example, typically have markedly different opinions
about preserving and spending money than those who grew up
amidst the economic boom of the 1950s and 1960s. And those who
have grown up in an environment that never lacked cell phones,
Internet, electronic money transfer, or a food-laden gas station at
every corner bring a much different concept of “normal” to the table
than their predecessors.
Before we can hope to communicate basic concepts to our kids,
we must be clear in our own minds what is still pertinent and what
isn’t. For example, does it make sense as a fallback to keep X amount
of salary in a bank savings account, as many of us were taught
growing up? Or is this a nonsensical alternative given the availability
of other savings vehicles? Come to terms with your own emotions,
preconceptions, and opinions regarding money. Think “big picture”
about which components of a fiscal management legacy you are
most intent upon your heirs absorbing. Be sure you are living these
concepts yourself. We all know that kids do what we do, not what
we say!
2) Teach responsibility—to self and family
It’s never too early... or too late. But teaching responsibility is a
v ital, basic building block. In entrepreneurial families, it may be
e specially difficult for a parent used to controlling almost every
o utcome to let loose enough to engender a sense of ownership in
th eir children. But teaching responsibility and its corollary—
accountability—is an integral building block to all other areas of
fiscal (and life) management.
The process can start at an amazingly young age with the simplest
tasks. Toddlers can be taught to move their own plate from the table
to the kitchen sink, or to put their dirty clothes in a hamper. Older
children can be responsible for pets or plants—and eventually
vehicle maintenance, sibling transportation, etc.
Establish boundaries and expectations in each fiscal management
area of their lives. They need to learn to have ownership and
responsibility, as well as to understand consequences and outcomes
of completing or not completing tasks. Accountability is a key
teacher, and with a little forethought you can make the lesson very
clear. For example, my driving-aged children know that I will pay for
the base level of their auto insurance, but any increase resulting from
moving violations or a falling off of grades will be their responsibility
to cover.
3) Teach them to spend less than they earn
This is the #1 core concept for folks at any level of wealth. Even if
you could afford to give your children whatever they want whenever
they want it, does this send the right message or make them better
people? Instead, teach a preschooler to put 5 or 10 cents of the 50
cents you gave them into a piggy bank and watch the balance grow.
Or as children get older, put them in charge of a pool of money—
such as paying them a quarterly allowance—and teach them to
