If you’re raising your children in a prosperous household, chances are you worked pretty hard for that money. Someone may even have taken the time out to teach you how to build real wealth. Surely you’ll want to teach your kids those same lessons. But raising kids with money comes with its own set of challenges. Follow these guidelines to avoid some of the pitfalls.
1. Give your children a set allowance and take care not to waver from that. If they want to buy a $300 handbag, they’re going to have to save up for it.
2. Before your children make any big investments with their money, like that $300 bag, sit down with them and have a discussion about investments. How much is that bag going to be worth in six months when another new designer comes along?
3. Create your own “mutual fund” where everyone studies different investment strategies (stock market, precious metals, oil, real estate, etc.) and track how they perform over a week or month’s time. Using play money, pay in for wise investments and penalize bad decisions. Let them cash in their earnings for various privileges or treats.
4. If you are a business owner or entrepreneur make sure your kids understand your story and how you got to where you are today. Take them to work with you or, if you work from home, let them be involved in the business somehow. Encourage them to develop their own interests but instill in them the same entrepreneurial spirit you possess.
5. Have your kids donate a portion of their allowance or earnings to charity. Help them research and select their own places for donations and discuss the inequities that exist in the world, encouraging a true appreciation for financial stability and wealth.
Raising kids with money and affluence does come with its own sets of challenges, but also with many rewards and opportunities. Don’t forget to pass on your wisdom to your kids, they’ll be grown up and on their own before you know it.