Maybe it’s a bit presumptuous on my part to title this post “Raising Future Millionaires”, a better title may have been “Raising Potential Future Millionaires.” Although I do not know what the future exactly holds for my three children, I do know my wife and I have laid down a solid foundation for them so far. No, I’m not here to pat myself on my own back, we still have a long way to go before we can kick back and declare victory on this one. I do however feel like we have laid such a solid path for them. We have led and taught by example, just like our parents did for us. My parents were married for 50 years and my in-laws are on their way. We have always taught the basics, right from wrong, say please and thank you, be respectful, be humble, be kind, share, forgive, and many other things as our children have grown up. It hasn’t been perfect, as an example, we are in the middle of negotiating how and when summer homework will be done. (When I say negotiating, I mean telling our children it needs to be done by this date or else) Then five years ago we introduced money into the equation. The initial involvement was just so they understood why they were hearing the word “no” so often, now it has even bigger meaning.
Paths to FIRE
Talking to teenagers about a financial independence, or retiring early and my guess is you are going to get a lot of blank stares. In a lot of cases, these teenagers haven’t ever worked a full-time job yet, but as I’ve mentioned it before if you need an attention grabber or conversation starter with your teenager how about trying “how would you like to be a millionaire?” This usually peaks their interest.
That’s been the key for us, making sure when we discuss money in our home that has meaning, and purpose. The initial conversation with our children was that there were going to be changes, in order for us to clean up our financial mess we had to make sacrifices. That was a good start, but unless we explained the “why” there would have been a lot of kicking and screaming. Our why was to have a better future, to reduce stress, to build wealth, my wife and I put it in terms our children could understand. It meant we could say “no” less, they agreed at the time that was a good thing. We then began to involved them more as the years went on, and as I look at it now it’s an incredible gift, because if these things are used from a young age that have the potential to grow exponentially.
Involvement– It just that simple, just involving our children in money discussion raises the financial IQ. They know that it’s okay to talk about money, even in bad times. This has taken the fear and taboo out of money discussions.
The “Why”– They understand the why behind shutting off lights or ticking the heat down a degree or two in the winter to save, because they’ve seen the electric and heating bills. If we blindly yelled at them all the time for these things it would create resentment. They understand why we shop with a list, why we compare prices, and why we wait before making a major purchase. It’s all about having a purpose for our money.
Tools – We’ve discussed things like budgets, companies 401K match, saving, reward credit cards, compound interest, and the rule of 72. All tools that they can use to help build and protect wealth.
I’ve always been excited about my children futures and believed we were doing a good job preparing them for their futures, but after educating ourselves on personal finance I realized we overlooked this piece of it. We have now taught them to learn from our mistakes and showed them with discipline and teamwork that mistake can be overcome. I’m now even more excited for their futures. Adding the financial and career pieces to our parenting feels like we are rounding out our parenting curriculum. I’m hoping that they will take these lesson and run with them, turning what we are doing in our forties into habits they form in their twenties, or possibly earlier.
I’m looking forward to sitting back and watching it all unfold and helping in any way I can, advice, course correction, or maybe just asking “how would you like to be a millionaire?”
Brian is a Dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013. Who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. Brian is involved in his local community. As a Financial Committee Chair with the Board of Education of his local school district, he has helped successfully launch a K-12 financial literacy program in a six thousand student district.
Exposing them to the idea is great Brian. They may not be in the place to understand yet. Like most things with kids, I would think that modeling a certain lifestyle has the best effect. I hope to model a lifestyle of financial stability, while following my interests/passions. We’re not there yet, but we’re moving that way everyday.
-Bryan
Modeling and leading by example is a great way for kids to learn. Good luck Bryan.
My six-year-old daughter understands frugality really well. She also understands why we save in some categories so we can spend more in others. I can’t wait to see where both of my kids end up!
She’s off to a great start.
I think a lot of parents yell at their kids about money but fail to explain the why behind it, which of course could still fall on deaf ears, but at least it lays a foundation.
Reminds me of supervisor or manger not explaining the “Why” behind need staff to get certain task done at a job, without the why the task loses it’s value, meaning. They’ll still get it done but with less effort.
I bet your kids will be thanking you a ton in 20 years (if they aren’t already). Exposing things to people early makes it less of a shock later. If a 20 year old racks up a $10k credit card bill, and then is explained to them that it’s going to keep growing even if you stop spending – well that’s a problem. Luckily I was very curious at a young age about money, and my parents were open. They weren’t great savers/investors, but always saved for retirement. Now I’m hoping I can pass some knowledge onto them as they approach retirement.
No need to thank me, just stay out of debt and save. 🙂 Good for you parents, setting you on a good path.
Not presumptuous at all. Laying the foundations for success in many different areas is one of the many duties as a parent. Easier said thatn done. But it starts with leading by example. That’s an investment that will continue to pay dividends.
I hopeful it will Luke! Thanks.
Love the title. I don’t know why more parents don’t take the time to explain the why behind things. It fosters understanding and appreciation far more than “I said so”
Agreed Stefanie.
I think that question, “How would you like to be a millionaire?” – is a great way to open up a conversation about money with kids. Just the fact that you are talking about money openly around your children is significant. My parents never did. They were great with money, but it was a hush, hush topic shrouded in mystery. We talk about it now too – my kids would say a bit too much. I have found that each of our 3 children has shown different tendencies when it comes to money. I just hope that they all end up to be wise money managers in the end.
I still try to get a feel for my children’s tendencies and that’s my hope for them too, but I think they do know now if they run into an issue they have a place to come and talk about any money problem.
Im pretty sure next year will be the year we start popping kids out and this has been a subject I have wondered about. No idea what to do but this is great insight. Might seek some advice in the future from you on this. 🙂
Anytime Alexander.
I knew absolutely nothing about investments and compound interest until I worked in a bank at age 20. You’re doing an awesome thing by teaching your children while they’re under your roof. I lucked out and worked in finance. Not everyone gets that chance. Or shall I say, takes advantage of that chance. 🙂
Thanks Laura. Either did I, so I want to give them a big head start.
I look forward to being able to have these discussions with my daughter, who’s only 5 1/2 now. We talk to her about the basics – saving money, some things are expensive, not spending money on one thing, so you’ll have money for something else later on – and she seems to understand as best she can. However, it’s still pretty theoretical to her, and it’ll be great to be able to share more numbers and specifics with her, when she’s mature enough to understand.
I really appreciate your “advice”, even if you didn’t mean it as such. My oldest two boys are just getting to the age where we’re having some great conversations about money. They have gotten a whiff of the prevailing cultural practices with money and they’re noticing that we don’t follow that route. I love the idea of getting them involved with our finances (age appropriately, of course).
Thanks Janeen. Great to start the foundation early. Good luck!
My parents became wealthy during my later childhood/teen years, so I had the opportunity to learn a lot about wealth that way. The funny thing is, they are great with money, but not what I would call particularly financially savvy. I think that their sort of old school common sense, combined with a high earning power really helped pave the way for them to “teach” us how to become wealthy. I hope to lay a similar foundation for my kids even if they don’t love spreadsheets or budgets nearly as much as I do.
Good news. I broke down and bought a new laptop and now I can access your site again. This reminds me of the saying ….Tell me, I’ll forget,Show me, I’ll remember, Involve me, I’ll understand. I try to involve the kids so they see the value of money and saving. Trying to strike the right balance so that they are informed but not overwhelmed. I hope I am doing a good job.
Glad to have you back May. I’m sure you are. Having any involvement is far ahead of many.
A great post. We all want our kids to be future millionaires, but usually we don’t do much to help pave their ways.
It really is a good thing to help them understand the logic behind everything; the whole concept of needs and wants and why it’s important to be frugal in most cases.
Thanks Zee. I want the best for my children too, giving them the tools to be successful will hopefully point them in the right direction.