Wealth building requires one to develop good money habits, which is something that has to be learned over time. Unfortunately, many people were never taught how to properly handle money and only come into the knowledge of what money management is when they become adults who are more times than not, trying to get themselves out of a financial bind.
Stop a second and think about this, where did you learn your money habits from? Were you taught as a child how to manage the money you were given, in other words, were you taught the importance of how to spend it, what to spend it on, how to save, why you should save, how it is earned, etc? Or were you just given your lunch money and told not to lose it?
Children are taught many things that prepare them for adulthood, however, one of the things we often hear many adults say is that they wish they were taught financial literacy and money management whether in the education system or by their parents. Too many people miss out on the opportunity to build wealth early simply because they did not know how to. Everyone can spend money, but not everyone knows how to properly make wise financial decisions when spending money, saving it, or even what it means to invest it because no one taught them how to do so. This leads to the cycle of generational poverty rather than generational wealth as bad money habits pass down from generation to generation.
While building wealth is important, sustaining it by creating generational wealth is even better, this is done by including your children in the process.
Take these two Profit Jumpstarter clients for example. Brian is struggling with maintaining good money habits. So was Peter. Brian avoids having conversations with his family about money because he is ashamed of his past money mistakes and doesn’t want to burden his family by discussing money issues. Peter on the other hand, though he has also made some bad financial decisions, understands that whatever good money habits he is now learning, his family, especially his children can learn too so they can make better financial decisions than he did when they get older.
Children typically learn monetary decisions from their parents, therefore, if there is an absence of financial conversations in the home, this can lead to bad financial habits and attitudes. Making an effort to teach healthy financial lessons to your children holds you accountable for practicing healthy financial habits yourself. It is ok to have your children present when discussing budgeting, monthly earnings, saving, and planning and doing so in a way that is fun as this will help them to develop a positive attitude towards money.
Here are some ways the team at Profit Jumpstarter encourages our clients to introduce good money habits to their children.
- Teach your children how to save- Instead of giving your children everything they desire, teach them the joy of delayed gratification by showing them how to save for what they want. Help them to set short-term financial goals and how to achieve them through saving and teach them the value of compound interest.
- Create opportunities for them to earn money- have your children do specific chores and give them an incentive or an allowance for doing those tasks to help them learn the benefits of earning money.
- Involve them in spending decisions- It’s never too early to have discussions about money. When you expose children to budgeting and money management it will instill in them good money habits early.
- Keep your money talks positive – Mindset is key and how you speak about money around your children will shape their thoughts about it.
Good money habits are an important part of your legacy, but you have to remember that your children will build their own relationships with money based on what they learn from you. So don’t just build wealth for your family, build it with them so that the money habits they learn from you will secure your family’s generational wealth.