Psychologists say that our very first introduction to money as children becomes the lens for how we view money in the future as adults.
As a parent, if you want to raise future successful, wealthy people – then you must set up a positive money lens for your kids. Early on in their life, you make sure your child views money as something they should save and invest – and not just use for spending on cool stuff.
Use fun language – so you keep the child engaged.
Let your children know that money can “grow” – even if it doesn’t grow on trees!
Money can “grow” if it is “planted properly.”
Talk to your child about planting “investment trees.”
Describe how to water and nurture these “investment trees” – how to feed these “investment trees” properly – and not starve them.
Give your children the opportunity to watch their “investment trees” grow – and grow – via the magic growth formula of “compounding.”
Give your kid an allowance — and/or even better – create opportunities they can earn money for their allowance via chores around the house.
Sit them down. Draw a fake check on a piece of paper – then fill in the date for 50+ years from now, (aka June 9 2081).
Next, put your kid’s name in the “payable to” space. Fill in the sum so it reads $1,000,0000.00.
Chances are you’ll now have your kid’s full, rapt attention — making this the perfect time to explain to them the process of how their earnings can begin to earn more earnings — with the magic of compounding interest.
Talk with your child about setting up both a checking account and savings account – where they can keep track of their money.
Together decide how much they want to put aside each month from their allowance — and where they want to plant it.
Saving account? Roth IRA? Family 401(k)? Or if some of that is far too complicated to explain to the child…consider giving them 3 at home banks: one for saving, one for spending, one for giving money to charity.
Get them excited about what they will do with the extra money that their investment tree will be growing.