Maybe it’s a bit presumptuous on my part to title this post “Raising Future Millionaires”, a better title may have been “Raising Potential Future Millionaires.” Although I do not know what the future exactly holds for my three children, I do know my wife and I have laid down a solid foundation for them so far. No I’m not here to pat myself on my own back, we still have a long way to go before we can kick back and declare victory on this one. I do however feel like we have laid such a solid path for them. We have led and taught be example, just like our parents did for us. My parents were married for 50 years and my in-laws are on their way. We have always taught the basics, right from wrong, say please and thank you, be respectful, be humble, be kind, share, forgive, and many other things as our children have grown up. It hasn’t been perfect, as an example we are in the middle of negotiating how and when summer homework will be done. (When I say negotiating, I mean telling our children it needs to be done by this date or else) Then five years ago we introduced money into the equation. The initial involvement was just so they understood why they were hearing the word “no” so often, now it has even bigger meaning.
Paths to FIRE
Talking to teenagers about a financial independence, or retiring early and my guess is you are going to get a lot of blank stares. In a lot of cases these teenagers haven’t ever worked a full-time job yet, but as I’ve mentioned it before if you need an attention grabber or conversation starter with your teenager how about trying “how would you like to be a millionaire?” This usually peaks their interest.
That’s been the key for us, making sure when we discuss money in our home that has meaning, and purpose. The initial conversation with our children was that there were going to be changes, in order for us to clean up our financial mess we had to make sacrifices. That was a good start, but unless we explained the “why” there would have been a lot of kicking and screaming. Our why was to have a better future, to reduce stress, to build wealth, my wife and I put it in terms our children could understand. It meant we could say “no” less, they agreed at the time that was a good thing. We than began to involved them more as the years went on, and as I look at it now it’s an incredible gift, because if these things are used from a young age that have the potential to grow exponentially.
Involvement – It just that simple, just involving our children in money discussion raises the financial IQ. They know that it’s okay to talk about money, even in bad times. This has taken the fear and taboo out of money discussions.
The “Why” – They understand the why behind shutting off lights or ticking the heat down a degree or two in the winter to save, because they’ve seen the electric and heating bills. If we blindly yelled at them all the time for these things it would create resentment. They understand why we shop with a list, why we compare prices, and why we wait before making a major purchase. It’s all about having a purpose for our money.
Tools – We’ve discussed things like budgets, a companies 401K match, saving, reward credit cards, compound interest, and the rule of 72. All tools that they can use to help build and protect wealth.
I’ve always been excited for my children futures, and believed we were doing a good job preparing them for their futures, but after educating ourselves on personal finance I realized we overlooked this piece of it. We have now taught them to learn from our mistakes and showed them with discipline and team work that mistake can be overcome. I’m now ever more excited for their futures. Adding the financial and career pieces to our parenting feels like we are rounding out our parenting curriculum. I’m hopefully that they will take these lesson and run with them, turning what we are doing in our forties into habits they form in their twenties, or possible earlier.
I’m looking forward to sitting back and watching it all unfold and helping in any way I can, advice, course correction, or maybe just asking “how would you like to be a millionaire?”