To one degree or another, we are all a function of the social environments in which we were raised. Of course, that encompasses both positives and negatives. When it comes to money, the first exposure we have to its management is in our families. That makes good money management practices a real gift that parents can pass on to their children.
Don’t Just Buy Your Kid a Car
The greatest motivator for a teenager is freedom, and their path to that freedom is a car. When you buy your kid a car, you are overlooking one of the greatest opportunities you have to support your child to learn to be self-sufficient.
Instead, why not support him or her to earn the money to buy the car him/herself? Or, if you have an extra car already available for your child, at least require your child to pay for the gas and insurance, which will support him or her to begin to be prepared for those requirements of life in the future, when you aren’t there to provide for all the needs they have.
Kids Playing the Stock Market?
Introducing children to the stock market is not a far-fetched idea. There is plenty of information available that can be understood by kids. First off, children are very aware of products — toys and games like the CashFlow Board Game, for example. They can be introduced to the fact that the companies that make these toys are owned by people like their parents, who hold shares of stock. From there, they can be shown the daily stock prices and how they change. As they grow older, your children can begin making small stock purchases and become comfortable with investing.
Family Vacation Saving
Family vacations are usually looked back on fondly and may even be considered family traditions. Saving during the year, by children as well as parents, for an annual vacation can also be part of that tradition and help teach good money management techniques. Whether it be from jobs kids have like grass cutting or babysitting, or just from allowance savings, it will serve children well later in life to have learned the value of setting money aside for a deferred pleasure.
Involve your children in your estate planning as soon as they are old enough to understand. They will feel secure knowing you’ve planned well for what would happen to them, if and when something happens to you. Have them meet the lawyer they will work with, tell them about how they will receive their inheritance and when. And, begin to talk now about how you can increase the overall family wealth you have and how you want to be cared for by them in the twilight of your life.
If you feel uncertain about how to approach these issues, contact us. Or read the books Die Wise, Being Mortal, and Family Wealth: Keeping It in the Family, all books that inform our firm’s personal process as your family lawyer.
Supporting your children to think like entrepreneurs can be one of the greatest gifts you give them. As the world shifts, we are moving into a new economy in which traditional jobs don’t always provide the security they once did. In fact, technology is already replacing many of the jobs people relied on in the past. As that trend continues, the only real job security will be resourcefulness, creativity and entrepreneurship.
Consider reading the book The Last Safe Investment by Bryan Franklin and Michael Ellsberg for some more ideas around this topic or call us to discuss any of these financial management techniques further.