5 Tips For Putting Your Child on The Path of Financial Independence

the path to financial independence

the path to financial independence

Somewhere around your child’s 18th birthday, when he or she is just getting used to life on a college campus, credit card companies will begin making offers. By this point, it’s pretty late in the game to begin teaching your child about financial literacy, cyber safety, and investment strategies. Ideally, you would have started these lessons years ago. Still, there’s a big difference between “pretty late” and “too late,” so whether you’ve started or not, here’s what you need to keep in mind.

Know The Basics

Before opening the first credit card or checking account, your child should know the fundamentals of financial literacy. She probalby won’t need to be able to do an SEC filing but your kid should understand how to count money and make change, calculate simple interest, and create a budget. Studies show that 70 percent of young people don’t have these basic skills as they enter adulthood. That’s one of the major conributing factors to our national epidemic of personal debt. In the wrong hands, a checkbook or credit card can be a disaster that will linger for years, the first step on a nasty death-spiral of uncontrolled debt.

Stay Internet Safe

Getting deep in debt isn’t the only possible fallout from having access to money. Thanks to the Internet and e-commerce, thieves have access to an amazing array of ways to steal your money. If you go through bank statements carefully every month, you’ll have a good shot at identifying fraudulent or erroneous items. But not many adults do that–and even fewer young people. Instead, use LifeLock to send alerts for questionable transactions and inquiries to both the parent and child. This way you can make a habit out of checking accounts and turn the whole thing into a teachable moment.

Hope For The Best…

… but plan for the worst. Like the rest of us, your child has no idea of the problems that could come up in the future. That said, the life experience you’ve gathered over the years will give you a better chance of identifying patterns and protecting against the unknown. Start teaching your child how to save and budget for unforeseen issues (and don’t be shy about brushing up on those skills yourself).

Saving To Portfolio

Once your child understands the simple aspects of saving, upgrade him to a portfolio. Introduce him to more sophisticated financial tools such as stocks, bonds, and mutual funds. This can be a fun experiment where you track imaginary transactions of real stock. Start by investing an imaginary $2,000. Let your child pick stocks and watch them daily as they fluctuate. Be sure to factor in brokerage fees, and have your child track his gains and losses. When both of you are confident that he’s got a good grasp on how the markets work, you may want to experiment with small sums in the real world.

Create New Businesspeople

Finances and work are integrally related. Juan Casimiro, founder of Casimiro Global Foundation which provides entrepreneurship training to youth, believes that personal economic empowerment and global social leadership are directly linked. Introduce your child to the principles of social entrepreneurship. Teach her how to make money while creating a better world. Show your child that financial success can be achieved while still helping others thrive.

Straight Talk on Parenting + The Opposite of Spoiled


Vicki Hoefle, author of The Straight Talk on Parenting.
Topic:
A no-nonsense approach to growing a grown-up.
Issues: Creating a blueprint of where you want to be; understanding that parenting is more about on-the job training and less about being perfect; bedtime bedlam, morning meltdowns; sibling squabbles; sass and backtalk; the trouble with tech.

Ron Lieber, author of The Opposite of Spoiled.
Topic:
Raising kids who are grounded, generous, and smart about money.
Issues: Why we need to talk about money; how to start the conversation; the allowance debate; the smartest ways for kids to spend; how to talk about giving; why kids should work; how much is enough?

You Forgot to Do Your Chores? Again? Really?

Dear Mr. Dad, My wife and I are extremely frustrated that we are always seem to be reminding our children, ages 10 and 14, to do their chores. They know exactly what they’re supposed to be doing, but they’re constantly “forgetting”—even if it’s something they’ve done three times a week for the last six months. We’ve discussed this with some of our friends who have kids about the same age, and they all have the same problem. Is there some way to get kids to do their chores without having to nag them over and over?

A: Kids have been “forgetting” to do their chores since the beginning of time—and parents have been nagging just as long. I’m sure Ma and Pa Cro-Magnon got sick and tired of reminding their cubs to put their spears away or take the sabertooth out for a walk. No question, kids sometimes “forget” their chores as a way of getting out of doing them (an approach that’s often successful). But sometimes they really do forget—even after being reminded 174 times. Unfortunately, there’s no sure-fire cure for this kind of selective memory loss, but there are a few strategies that may help.
[Read more…]

Financial Fitness for Kids

[amazon asin=1607744082&template=thumbleft&chan=default]Joline Godfrey, author of Raising Financially Fit Kids.
Topic:
A pioneer in increasing children’s financial literacy talks about thriving in a post-Madoff, post-subprime meltdown world.
Issues: Five financial development stages; essential skills children (of all ages) need to learn; observing your children’s money style and helping kids differentiate between wants and needs; connecting goals and savings; fostering an entrepreneurial spirit.

Kids and Money + Making Fiends + Drug-Free Kid

[amazon asin=1607744082&template=thumbleft&chan=default]Joline Godfrey, author of Raising Financially Fit Kids.
Topic:
A pioneer in increasing children’s financial literacy talks about thriving in a post-Madoff, post-subprime meltdown world.
Issues: Five financial development stages; essential skills children (of all ages) need to learn; observing your children’s money style and helping kids differentiate between wants and needs; connecting goals and savings; fostering an entrepreneurial spirit.

[amazon asin=0738213233&template=thumbleft&chan=default]Elizabeth Hartley Brewer, author of Making Friends
Topic:
A guide to understanding and nurturing your child’s friendships
Issues: Should you worry when your child’s imaginary friend sticks around past preschool? How do boys’ and girls’ friendships differ? What do kids really value in a friendship? What should you do if you don’t like one of your child’s friends?

[amazon asin=B003E7ET44&template=thumbleft&chan=default]Joseph Califano, author of How to Raise a Drug-Free Kid.
Topic:
The straight dope for parents
Issues: When and how to talk to your kids about drugs and alcohol; how to respond when your kid asks, “Did you do drugs?”; how to know when your child is most at risk; how to prepare your teen for the freedoms and perils of college

Reinventing Your Shopping Strategy + Best American Products for Kids + Narcissism Epidemic

[amazon asin=080072206X&template=thumbleft&chan=default]Kasey Knight Trenum, author of Couponing for the Rest of Us.
Topic
: A not-so-extreme guide to saving more.
Issues: Where to find coupons for what your family eats; how to reinvent your shopping strategy, how to make grocery shopping less stressful–and even fun.

[amazon asin=B005IUY2RY&template=thumbleft&chan=default]Bruce Wolk, author of Made Here, Baby!
Topic:
Finding the best American-made products for kids
Issues: Family businesses, green companies, minority- and women-owned businesses; how small manufacturers get distribution; why buying American products can help assure us of quality and safety.

[amazon asin=1416575995&template=thumbleft&chan=default]Jean Twenge, author of The Narcissism Epidemic.
Topic:
Living in the age of entitlement
Issues: The characteristics of narcissism; how narcissistic values such as materialism, vanity, and entitlement have spread to the culture at large; the real costs of narcissism in the workplace, relationships, school, and everywhere else.