Teaching kids the right things about money can be a bit challenging. During this Covid period, I've spent a lot more time at home with my 6 kids, and it's given me time to think about how to better educate my kids about money. I've had a few breakthroughs in getting past the widely taught "get on a budget, get out of debt" mindset.
Now I don't have everything figured out when it comes to teaching my kids all the ins and outs about money, but using these 4 principles gives them a 20 year head start on when I began figuring out this money thing. I wish someone had shared this with me when I was teen!
4 Principles and Tactics for Your Future Millionaires
Start saving early for your car. You'll need $6,000-$7,000 for a reliable used car to last 8-10 years (the rest of high school, and 4 years of college). Buy a car under 100,000 miles or as close to 100,000 miles as possible if you can find it. Look for a car that has a track record for lasting to 200,000+ miles and is in good shape with a great service history. We started saving birthday and Christmas gift money for our kids they were born. Money given to our kids from grandparents and relatives was placed into a savings account. This gave each child $200-$300 per year in savings for their car. At 16 years of age, they would have $2,000 to $4,000 saved for their car simply by saving their birthday and Christmas money. The remaining money came from jobs like babysitting, house cleaning, lawn cutting, or my wife and I chipping in the rest to buy them a reliable used car.
Use the 30/30/30/10 spending/budgeting plan. 30% spending, 30% saving, 30% investing, 10% giving. It helps your kids develop a mindset of being frugal, saving for their needs, investing to build wealth, and altruism for helping people.
Start investing ASAP. Preferably with $100-$250 a month for working teenagers. $250/mo is $3,000 per year. I recommend a split of mutual funds, stocks, and silver. However, as a teen, it's easier to get the principle of investing across by allowing them to buy into the stock(s) of a company they use. One of my sons bought Apple stock and has already seen growth and purchased additional shares. My other son bought silver. I'm now working on an investment portfolio plan for my 12-year-old daughter. It’s easy setup a custodial stock trading account with eTrade or a custodial mutual fund account with Vanguard. In both cases, the parent is the custodian of the account while the child is the account holder. You can connect the accounts to a checking account so that your child can make additional investments on their own. I made my son’s first Apple purchases with him. He has continued to make additional Apple purchases on his own. I’m guiding him on diversifying his investments into Tesla and other company’s that interest him. Have your kids learn to research their investments before making them.
Help your teens make their own millionaire choice and create their own millionaire plan. It may sound crazy, but there's a real possibility they could reach millionaire status by age 30 based on making the right life and financial choices. I've talked with many millionaires who went from nothing to millionaire in 15-20 years once they set their mind on their goal. Some of these millionaires made their millionaire choice as children between the ages of 5 and 18 reaching their millionaire goal by age 30.
Your kids won't get it perfect, and that's okay. The main things are to help your kids develop the right mindset about money and getting your kid's money moving in the right direction. As a parent, all we can do is to do our best to set them up for success. The rest is up to them!