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I created this site to help you take control of your personal economy and forge your own unique legacy. To that end, much of the content here is focused on helping you build a successful, lucrative online business. But your legacy is not only about generating cash flow today. It’s also about preserving your wealth across successive generations and using it to make an impact in the world.
For the time being, this activity is all in your control. By making sound, informed investment decisions, you can multiply and protect the wealth you generate. You can also decide where, when and how you will donate your time, talents and financial resources to enrich the lives of others.
At some point, however, you will relinquish control over your estate to your children. History, Shakespeare and the supermarket tabloids all show us that this can turn out to be either an extremely positive experience, or an absolute train wreck. While the outcome is not completely up to you, how you take action from the first innings will have a considerable influence on the final score.
If You Don’t Teach Them, Who Will?
It all boils down to educating our children and instilling in them the proper mindsets about money and wealth so that they are firmly grounded in a world that is replete with bad examples and obsessed with consumerism. This is the first in a series of articles intended to get you thinking and help you create your own game plan for building a solid foundation for your next generation.
The best way to ensure that your legacy is left in good hands is to start educating your children about money at a young age. This is true no matter what your financial situation. Unfortunately, many of us intentionally avoid having money conversations with our children in order to insulate or protect them, or because we think they are too young to understand. While these actions may be well-intentioned, nothing could be more dangerous or farther from the truth.
In a future post, I will cover some of the ways to approach this education and how to do it in an age appropriate manner. For now, it is critical that we never lose sight of the fact that, whether we choose to guide the discussion or not, our children are learning about money. Just ask the advertisers, they know the score.
A Questionable Report Card
We all work to help our children get good grades at school, but do we work as hard to ensure that their financial education is solid? Research suggests otherwise. Researchers estimate that only just over a third of all parents teach children how to perform simple personal financial tasks, such as how to pay bills or balance an account. Fewer still have learned anything about investing or have developed an appreciation for giving.
National surveys reveal that a significant majority of kids are leaving high school without a basic understanding of issues relating to savings and credit card debt. This is evidenced by the fact that that credit card debt among 18-24 year olds more than doubled during the period between 1996 and 2006. It is also telling that many universities report more students drop out of college due to credit card debt than to academic failure.
What the Ad Men Know
Media advertising provides a more consistent source of money related information to children. It’s no big mystery why this is so. Economic demand in the United States is approximately $14 trillion annually. Consumer spending comprises almost 70% of this amount. That is a pretty impressive statistic, but even more staggering is the fact that analysts estimate that eighty percent of all consumer product purchases in the US are influenced by children! The average person, including the average child, is exposed to more than 5,000 advertising impressions each day, more than double the amount 30 years ago. Advertising specifically directed at children is in excess of $15 Billion annually.
Our children are exposed to advertising on a daily basis that is full of messages which have a significant impact on their perception and values regarding money. In our hyperconsumer culture, these messages and the values they portray are often inconsistent with the other values we wish to instill in our children. Left unchecked, these messages can lead kids to develop a surreal concept of money. Many truly think that money is invincible and just magically appears out of a hole in the wall when its called for.
This mindset is dangerous and directly at odds with values necessary to ensure that our children will be good stewards of the wealth we leave in their hands.
Do You Know, That They Know, What You Are REALLY Telling Them?
On the surface, our own decisions and actions may actually reinforce what the media presents to our children. The question is not whether or not we can responsibly afford the cars that we drive, the homes that we purchase, the clothes that we wear, and/or the vacations that we enjoy. (Although we need to be honest about addressing those questions ourselves.) The reality is that these actions are all public statements we make to our children about financial stewardship. They will interpret our actions through the lens that we provide for them.
Unless we teach our children how to be financially responsible in the first place, they won’t be able to put our actions into context and discern between financially appropriate and inappropriate behaviors. This can only happen if we maintain a proper financial dialog with them as they grow up. Their actions will be a reflection of how successfully we maintain this dialog.
In the next installment of this series, I will discuss the subject of giving and how important it is in helping children develop a healthy mindset regarding wealth and money. In the third and final installment, I will provide some ideas on how to create an open, ongoing and healthy financial dialog with your children.
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November 12th, 2009 at 6:03 pm
Chip,
This is a fabulous article. I believe children should be learning the value of a dollar, spending habits, financial disciplines, and entrepreneurship and tithing from the time they can ask for money for an ice cream. Well…. you know what I mean.
Awesome content and I am super glad to syndicate this. Keep this stuff coming! You have a strong message that needs to get out.
November 12th, 2009 at 6:10 pm
Thanks Debbie! By the way, I was commenting on your latest just now as well. Great Minds…. LOL
Thanks for the kind words, and I will let you know when the next installment rolls out.
Best to you and Yours. Chip
November 12th, 2009 at 8:09 pm
Hey Chip…I love it!
I have seven children and we homeschool them all. I decided that we would take this fall and have the two elder children…12 and 15…create a product, package it, market it and sell it in order to teach them about business. This is simply not an exercise for education’s sake…it is a practical endeavor to enable them to generate a good cash flow and truly begin to understand the process of business.
We teach our children how to be entrepreneurs starting at about age 10 or 11. We have never given an allowance and yet they create more money for themselves than if they were given one. Included in this education is open communication concerning our families finances, investing, hard work and much more.
I really believe your insights are so needed in today’s day and age and I look forward to continue reading and learning as you post the rest of the series.
Blessings!
Bruce Backman´s last blog ..Trust…in Business and Life
November 12th, 2009 at 9:27 pm
Bruce – That is an AWESOME idea with your kids! I love where my guys are in school, but I envy your ability to do that. My 2 are also 12 and 15 (this Saturday). We ought to talk about what you’ve done. I can see a Youth Mastermind Group in the works and a great chance to create something. I’ll get in touch with you about it!
Best to you and your team of Empowered Entrepreneurs!
Chip
November 13th, 2009 at 12:26 am
Bruce, wow what a cool thing to do with your children! 7, wow!
Thanks Chip for this article. I don’t have children yet, but maybe someday! I remember as a child being so excited to have a lemonade stand and to start a babysitting business. That’s probably what got me into being an entrepreneur.
Did you read the book Rich Dad Poor Dad? That’s another perspective on this whole money/child issue as well.
Looking forward to reading more!
Sue Vittner´s last blog ..40 Day Prosperity Program
November 13th, 2009 at 1:27 am
Hi Sue! Thanks for your comments.
I have read Rich Dad. In fact I talk about Mr Kyosaki’s “Cash Flow Quadrant” in my “Wealth or Welfare” post. He does have an interesting perspective on the money/child thing. He also created a version of his Cash Flow game for kids. I haven’t played it with mine, but I hear it is a great learning tool.
Its amazing what sorts of incredible things can be born from a corner lemonade stand!
Best Regards,
Chip
November 13th, 2009 at 4:25 am
Hi Chip-
Important information. I’ve taught my kids since the were young, but still fear I did not do enough. Love what Bruce did with his kids – kudos.
I’ve got the Rich Dad game, now to get my kids to do a game night, like when they were younger.
Hoping you reach tons of parents, will certainly do my part by retweeting! They are our future afterall.
Great job, Chip.
Kat
Kat Krug´s last blog ..The Secret Code of Success by Noah St. John: A Review
November 13th, 2009 at 3:39 pm
Hey Chip:
I have 4 children and what I have noticed over the last few years is the lack of time spent with our children. They spend more time in school and at the daycare than with their parents. We need to get back to raising our own kids and instilling the values we want them to have as adults.
Great post..keep it up.
November 13th, 2009 at 4:13 pm
Hey Kat, Hope your are having a GREAT Friday!
I know exactly what you mean about “fear that I don’t do enough” for my kids (and my wife). That is the only fear I’m willing to believe is legit right now, mostly because it is the only fear I can think of that leads to action instead of inaction. Bruce’s comment really was inspiring!
We’re thinking of reinstating game night. How old are your kids, and what other games do you have in the mix??
Take Care and Thanks For Commenting.
November 13th, 2009 at 4:47 pm
Hi Chip,
I so enjoyed your post. As a parent, your message definitely resonates with me. My son will be 18 next month and my daughter is 11. I think it is so important to teach our children at a young age the value of money and how to manage it. The world is just so messed up in this area and you cannot assume your kids will “get it” on their own. Thank you for bringing this message. I will definitely be passing it on.
Kellie Stewart´s last blog ..Thought For The Day: Live A Life That Matters
November 13th, 2009 at 7:37 pm
RJ –
It is really amazing isn’t it, that many of the same people that get upset about having thier jobs outsourced are more than happy to outsource their parental responsibilities without ever beating an eye?
We can’t expect schools, day care – or worst of all the government – to raise our children. I think that a lot of the issues we wee in society today hinge on this parental outsourcing trend.
No one said it was going to be easy, but nothing of lasting value is.
Take Care My Friend
Chip
November 16th, 2009 at 12:45 am
Hey Chip,
Great post man!
When my kids were small I had them read Rich Dad Poor Dad, I bought the Cash flow Game and we played that too.
It is interesting my daughter loved to get those do-dads while my son would carry a toy around in the store for 30 minutes and get to the register and put it down because he didn’t want to spend his money.
Another gift I think we can give our kids is to teach them how to be entrepreneurs, from selling kool-aid to candy kids can learn the power of negotiation and how to make a profit. Kids are son different sometimes.
They must learn not only how to earn money but how to use it properly. Thanks for the great info Chip. And for being a great dad!
You have a choice so, make it a better than terrific day!
Terry
Terry Petrovick´s last blog ..Top 5 Productivity Tools for Network Marketers and Online Marketers
November 16th, 2009 at 3:06 am
Terry –
Thanks for the feedback. I totally agree about encouraging entrepreneurship in our children. You ought to take a look at Bruce Backman’s coment. He has soe great ideas on that front.
It;s more important than ever to maks sure they know early on that they can create their personal economy – from generating income to managing and growing it. That education is lacking severely if we don’t provide it.
Thanks for the suggestion, I’ll make it an OUTSTANDING day. You do the same!
Chip
January 24th, 2010 at 7:15 pm
Excellent post. Thanks. Although my website is undergoing a revamp, I have an article about why your 9 year old should know about the family’s finances, how that might impact the idea of an allowance, and a second article about chores that follows in the same spirit.
Also enjoyed everyone’s comments.
http://caitlynjames.com
January 28th, 2010 at 2:31 pm
Caitlyn,
Thank you for your reply and kind words. I look forward to reading your posts as well. This is a topic that is often uncomfortable for parents to address because we don’t always feel that we are doing a good job ourselves. Sometimes the best way to turn that around is to make the commitment to teach your kids. It is never too early or too late to start.
Regards,
Chip