If your goal is to make your child unstoppable, lessons around money are going to be very important. The earlier these lessons are introduced, the better. Imagine a teenager that has more money sense than most adults, and with a comfortable bank account to boot! This would be amazing, and would reduce the stress load of any child going off to university. More time could be spent on studying, less time on money worries.
It is important to impart on your child that life is not all about money. Money is necessary to do some of the things that you want to do in life, and to have a comfortable home and good healthy food, but if you spend all your time working for the money to do all this living, life will pass you by. You won't be able to enjoy the money you made. Balance should be a key lesson. Time is precious. Let them appreciate how precious time really is.
How do I start?
Start by giving your child an allowance. This allowance should be based on some sort of contribution to the household. There should be an automatic amount paid on the same day each week regardless of quality of work. This is similar to the work force. However, bonuses of money and of special events should be given for work well done. This will create some incentive to do well.
Offer your child extra money for chores not usually on the responsibility list, such as cleaning the garage, or mopping the floors.
After each "payday" have your child save 30% in a Savings Account (or piggy bank). This money is not to be touched unless something big comes along and it makes sense to use it.
The other 70% is split into 10% investment, 10% charity, and 50% for spending.
You will obviously be in charge of their weekly investing, but as they get older, discuss it with them on a weekly basis. Let them see the growth over time. It is so exciting to see that growth. They may even choose to add more to the investing percentage.
You may be wondering about the charity. This is where the brain comes in. Our brains grow when we express kindness and compassion. The area of growth is in the Insula of the brain. Studies have shown that when the insula grows larger, we become better at staying focused and having a calm disposition when life throws a curve ball. This is emotional intelligence, which is very advantageous to those seeking happiness and success in life. Giving to charity grows this part of the brain, and is a lesson that all kids should learn at a very young age. Pick a charity for them when they are young, but allow them to decide once they can form an opinion on the matter. David Bach from the Automatic Millionaire Blueprint says that the giving to charity is a must and should not be missed, even before being a millionaire.
This may seem strict for a young child, but it is one of the most valuable lessons in today's bankruptcy society. They will fight you on it, but you must insist. They will be so grateful when they are adults with great money sense and a comfortable lifestyle. If you follow these rules, it won't be how much money they make that will determine their wealth, it will be what they did with their money that will matter. Your child, learning these easy lessons, can be a millionaire at their retirement.
Think about the freedom that you could help give them. Could that not be one of the greatest gifts?
Teach them about money sense, and they won't have to spend their whole lives working. They will be able to have balance. They will be able to live life to the fullest, and be........