Adnan Rafique M.D.
“Dollar Bill: People spend their whole life seeking to earn it but won’t spend 10 minutes seeking to learn it” ~ Oren Woodward.
Summertime has just kicked in. Kids graduated and are excited about a lot of free time. Most parents, on the other hand, are wondering how to best utilize this free time for their kids. Many parents have enrolled their kids in different camps and classes and older kids finding part-time jobs and are excited about starting college very soon. Some will be starting their first real job.
Most kids from age 10-18 or even older may not have anything planned but long sleeping hours, vacation time, and lots and lots of screen time. Parents need to negotiate with their kids for some productive time to control social media and electronic devices and give them some tasks which benefit the entire family.
Our kids belonged to the generation of social media, they are very smart, well-informed, well-educated, well-traveled, and much better with technology as compared to their previous generations. But they have one thing in common with their prior generations and that is a “lack of financial literacy.” With too much social media exposure, they are very easily impressed with the fake lifestyle of their friends, bombarded with products to consume, want to have everything that their online friends have, & they want it now. As a result of spending too much time on their devices, they have fewer social skills, spend less time communicating with their family members, and are unaware of the financial challenges their parents have been facing. They are more entitled than their parent generation. But is it all their fault? Parents should also take some responsibility for not evolving their thoughts and parental techniques with time, leaving important life lessons like financial literacy out of the discussion and keeping themselves busy in the rat race, and catching up with the Joneses.
As a concerned parent, we always wish and hope the best for our kids and do everything possible to better prepare them for real life. Financial literacy is something that needs to be improved in our traditional education system, who is responsible for teaching our future generations this very important aspect of living a successful life, is it parents, teachers, professional colleagues, or kids themselves? I think as a parent, we need to take this responsibility and start talking to our kids about money at an early age.
Summer break is the best time for families to sit together and discuss different components of finances: earning, spending, saving, investing, borrowing, and giving. The question is, at what age our kids should have a money talk? I think 10 yrs. and older should start hearing the discussion about money. Older kids need more organized sessions where they should understand the basics of budgeting and investing.
Stress is part of life but families with no financial literacy suffer the most from any minor or major economic challenges and find it hard to come out of those problems. On the other hand, kids from financially literate families tend to make fewer financial blunders and come out of economic challenges in a better fashion. Money is directly related to the quality of life and a healthy relationship with money will help the entire family feel protected and prosperous.
Starting at an early age will help our kids develop healthy financial habits and their future is the product of their habits. Financially literate households can help teach their kids how to control impulsive spending habits by creating and implementing budgeting and rewarding them for saving money.
Start age-appropriate money talk. Talking about money doesn’t mean you are teaching love for money. Get your mindset right about money and stop demonizing money as we all know, “money is not bad, it’s the greed and love for money that makes it bad.”
The following are the 10 points everyone should discuss with their kids:
Explain how you earn the money and what are you doing with it.
Teach kids how to spend a dollar (4 things you do with your money are: spend, save, invest, and give). Explain the difference between things we need and things we want.
Start finding their interest in different professions and their earning potential, graduating with a worthless major with or without student debt should not be promoted as a viable option.
Teach them the different methods of buying goods and services like cash, credit, and debit. Teach them how to best use credit cards, paying off in full every month is the only option.
Talk about the importance of saving and investing. Saving alone is not smart, without investing you can never be wealthy. Talk about stocks and real estate. Talk about the early start and compound effect of long-term investing.
Explain the difference between asset and liability, good debt, and bad debt.
Never talk negatively about money and rich people in front of your kids.
Have kids earn money with different chores (ex. reading a book about finance and success, solving a puzzle game, cutting grass, washing the driveway, etc.). I don’t like to pay kids for the chores they are supposed to do as a member of the family, like keeping their room clean, washing their dishes, doing their laundry, etc.
Play games with kids that involve money like Monopoly.
Most importantly raise your kid as an “EMPLOYER, not as an Employee”.
To teach our kids this extremely important lesson of life, we as a parent need to learn and practice what we want to preach. Set your ego aside and find time to read books and listen to lectures about basic money management. Then, apply this in your lives so your kids can see and learn from your actions, and don’t call you a hypocrite. Some of us are blessed to have wealth that we will be transferring to our kids, without proper training and financial literacy this transferred wealth will soon be lost.
Take responsibility, feel the urgency, and don’t ignore the importance of financial literacy in the success of your child and your legacy.
Best Books for Kids and Teenagers about Money:
1. Bunny Money by Rose Marry Wells (for Kids under 10)
2. The Compound Effect by Darren Hardy (for Youth and adults)
3. Make your kid a money Genius (Even if you are not) By Keith Kobliner. (Ages 10-20)
4. The Ultimate Kid’s Money book by Neal S Godfrey. (Ages 6-18)
5. Rich Dad Poor Dad by Robert Kiyosaki. (For everyone)
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