Financially successful kids, to be honest, is what we seriously need. Let us face it – we are a nation who can sometimes be too reckless with our financial choices. Most of us cannot live without using credit. That does not mean we are all irresponsible with money. There are those who can use credit without worrying about not being able to pay it off. But the fact remains that we always put ourselves in a precarious position when it comes to our finances.
If this is a habit that we will pass on to our kids, then we are in a lot of trouble. This is why we need to seriously think about what we will be teaching the children. If our current financial situation is in a dangerous position, then we need to change something. While we can start with our own habits, we should also consider getting the kids to start early. If they know nothing else but the good financial habits, then the chances of making mistakes will be lower.
According to statistics, 1 out of 5 children cannot reach the basic level in a financial literacy proficiency test. That means these are the kids that will have a hard time creating a budget, buying their own house, or even paying their student loans. While people may say that this is a good statistic, we should never disregard that 20% who are expected to have trouble with their finances in the future.
If you want these kids to be a financial success, you might want to make sure they have the right traits that will make them millionaires. These are the traits that will make them financially successful kids.
Two important traits to achieve financial success
The truth is, some kids feel overwhelmed because there are so many things to learn. You have saving, budgeting, investing, financial planning, etc. But the truth is, there are only a couple of things that you should teach kids and everything else will naturally follow. Having them learn budgeting, saving, and investing directly might be hard to do. You might not be able to catch their attention. However, if you teach them specific traits, they will realize how important the other financial concepts are. They will naturally seek out to learn about these.
According to Jim Koch, a self-made billionaire, you only need to teach them two things if you want them to become financially successful kids.
Love for learning
The first thing that you need to instill in a child is the love of learning something new. To be specific, they should not be averse to education. They should consider it as an investment. You need to convince them that whatever they learn will be theirs alone. Among all the investments they will have, this is one that will stay with them forever. Other investments like a house, car, and even stocks and bonds can be taken from you. But what you have in your head will always be with you no matter what happens around you. That can be used in making smart financial decisions.
When children have a thirst to learn something new, they will be ambitious and aggressive in making their lives better. Whatever knowledge they have will give them the confidence to pursue their dreams. And if there is something that they do not understand – that will not hinder them. They will have the initiative to pursue the unknown. This will make them an unstoppable force that will not stop until they have improved their financial lives.
This is what the future generations need. A thirst for learning will ensure that there will always be an improvement going on. It is an assurance that our society can always expect a new development that will improve the overall quality of living.
Strong work ethic
The second trait that the self-made billionaire mentioned is work ethic. But what exactly does a strong work ethic mean?
Well, it is not just about working hard. It is also not about having a part-time job so you can pay the bills. Having a strong work ethic means you have a sense of responsibility and teamwork. Besides that, you work with integrity and discipline. When you teach kids how to have a strong work ethic, they will put a lot of emphasis on the quality of their output. This is what a strong work ethic really entails. You do not just work – you make sure that the work you put in will matter. You will strive to ensure that every effort will take you one step closer to your end goal.
Without a great work ethic, you will probably reach your goals a lot longer than you planned. You might even not get there. So make sure that you teach kids about the proper way of working. The digital age has made a lot of us too reliant on technology. While it is still important to keep updates of technological advancements, there is nothing like knowing how to use your hands too. Be sure your kids know how to use theirs productively.
The truth is, both your love for learning and strong work ethic work well together. On their own, they are already great. But when you combine them together, it will guarantee that you will have financially successful kids. The love of learning gives them the knowledge and skills. Their work ethics will ensure that these are put into action and good use. It will not only be an advantage to your kids, it will also benefit those that they will be working with in the future.
Third lesson to raise financially successful kids
Apart from the love of learning and strong work ethic, there is one more thing that you need to teach in order to have financially successful kids. You also have to teach them how to manage their money wisely. While their love for learning and strong work ethic can prompt them to make smart financial choices, teaching them specific financial lessons will really help.
According to reports, 1 out of 5 teens (15 years old) does not have the right level of basic financial knowledge. This is probably caused by the lack of personal finance lessons being taught in school. Apparently, only 1 out of 3 states in the US require students in high school to study personal finance before graduating. If the schools are not mandated to teach financial lessons, then it is up to the parents to make sure that this is a lesson that their kids will not skip.
But what are the lessons that you need to focus on? Here are the three important things that you need to teach them.
Let us start with a budget plan. This is like your money management blueprint. It will help define how much you earn each month and where that money should go. Teach your kids how to create a budget plan and more importantly, commit to it.
There are so many goals for you to save up for. You need to save for your retirement, future house, and even your annual vacation. If you want to buy a car, it is better to pay for it in cash because it depreciates over time. Not only that, you also have to save up for an emergency fund. This will keep you from having to borrow money when an unexpected expense comes up. You need to teach your kids that importance of saving. Instead of borrowing money, they should save up for it. They will enjoy the purchase more if they know it is fully paid in cash. Learning how to save will also help them build a secure financial future.
Since we live in a consumerist society, we are compelled to spend our hard earned money. If you want to raise financially successful kids, you have to teach them how to be smart with their spending. Define the difference between a want and a need. You do not have to keep them from making purchases through credit too. Allow them to use credit but make sure they are responsible for dealing with it. That means paying it back. Making smart spending choices is the hardest lesson to learn. We all start by being impulsive with our spending. Your kids will probably do the same. Make sure they do not develop that habit.