Most people fail to give their children the greatest gift they could give them because of a fear of talking about money.
If you have children, do you feel you are giving them enough support to have a good life? It’s so hard being a parent and trying to do all the right things to help them develop to meet the challenging future that looks to be dead ahead for all of us.
We work hard to make sure they have a good education. We work hard to try to build good character in them for the future (which will surely test them).
Rarely do adults talk with their children about managing money, saving regularly and investing for short, medium and long-term goals. That is because it is often thought of as completely private. Plus, we often think our children will just “pick it up!”
Well, maybe they will pick it up. Is that good enough for you? Is it good enough for them?
The goal shouldn’t be about “becoming rich.” Most people who don’t have wealth think that being rich solves all problems. How could it? What having money does for you is give you options you might not otherwise have without it.
The process of writing this blog started for me as a way to communicate basic ideas about saving money automatically, “tricking myself” into saving more than I ordinarily (automatically) would. I wanted to share with them that it does not matter who you are or what you make. The best thing that they can do is save automatically and regularly.
We talk with our children about the length of 401k investments. In other words, a 401k investment is money you don’t expect to see for so long you should almost forget about it. You can’t judge how your 401k is doing by looking at only one (1) or two (2) years.
If you are like many of us, you don’t believe Social Security will be around when you get to retirement. Unfortunately, now many are starting to think they should go beyond 401k investing. It is our position that you should teach your children to build an emergency savings fund (15 to 18 months of expenses in money market savings and certificates of deposit) and invest in both 401k and either a Roth IRA or Traditional IRA.
Don’t let your children “just pick it up.” Rich people teach their children about the importance of growing assets.
Teaching your children the importance of automatic savings can provide more for them than their education. Yes, I said it. If you teach them the truth, they will be FREE. When they are your age, they will be wealthy.
So many people today focus on what they are paid. You must teach your children that it is not what you make, it is what you save.
Today going forward it will become more important for everyone to limit credit and revert to families that have a cash reserve base.
If you’ve been following our blog for awhile, you know that we believe the country has been “on its’ head” for a long time making credit king when the truth is: CASH IS KING.
Don’t teach your children to “chase their credit score.” You want them to have good credit, but you will give them great balance if you show them that the path to real wealth is to limit credit liabilities and grow assets.
Please teach your children the truth. You can’t own credit cards – credit cards own you.
You must save regularly or you will end up in a bind. Look for the safest opportunities to grow assets and generate passive revenue or income.
If you regularly save in a 401k, Roth IRA, money market savings account and certificates of deposit, you will build wealth over time. Getting rich quick is not likely. Building real wealth takes time and strategy.
Once you have established the proper emergency savings fund and you are saving an average of 15% of your after tax pay, you will be able to use your savings to build mutual fund assets. However, most people want to begin this process by focusing on savings in money market savings and certificates and move beyond to 401k and IRAs and then to the mutual funds.
The keys to establishing a program of building emergency savings and assets is to begin with automatic savings.
You can do this. You can share it with your children, and you will both build family wealth.
As always, thank you for reading our little blog.
Good luck (and good teaching).