Thursday, April 10, 2008

Rule # 4 Teach Your Children

“The teaching of the wise is a fountain of life, turning a man from the snares of death.” Proverbs 13:14

Teach your children.
Our children learn most everything by watching what their parents do, not by what their parents say.

It is the responsibility of parents to teach their children money management concepts. The first concept they should learn and the most important is the ability to delay gratification. A spoiled 4 year old is one thing, a "spoiled" 50 year old is financially doomed.

Walmart has built an empire based on the knowledge that people cannot delay gratification. They add the idea that you are getting a "great deal" to provide you the justification to buy now. Shopping with your children is a great platform to teach them how to spend money, you are teaching them whether you want to or not because they learn by watching you.

So teach them by telling them why you have come to the store, what you are going to buy, and then exit the building with nothing in your hands other than what you had planned to buy. If they "see" something they "want" and it was not the reason for this trip to the store the answer should be no.

After you leave the store you ask your child why they wanted to buy the "thing" and ask them to think if it is something that they really believe is worth spending money on. Talk to them about all the other "things" they have purchased and if they had it to do over again would they still spend that money on the same "thing".

As Napoleon Hill so aptly said, "think and grow rich".

The second concept we should teach our children is that plastic is not money. Many children think it is because many parents act like it is. When your children see you using a credit or debit card make sure you explain to them how they work and how they are different. In case your not sure, a credit card is a loan, a debit card with cash in the account is not.

Teach your children a balance with money between spending, saving, and giving. Again they will learn this by watching you.

Introduce the concept of getting your money to work for you, show your children dividends, rent, or interest coming in and how the money invested in a income producing vehicle is making this income for you.

This, of course, assumes you have some type of income producing vehicle you can show them. :)

I may have mentioned this before, they learn by watching us.

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