Financial Mistakes You Don't Want Your Kids to Repeat
by Darren Hardy
Modeling Money Behaviors
Teaching Children the Value of Money
You Bought Junk You Didn't Really Need - "Retail therapy" is not a prescription from your psychiatrist. Teach your kids to ask themselves the following questions before they buy: Do I need it or just want it? It's good to separate those two. You will be surprised how few fit into "need" and how many are just "wants." If I want it, how bad do I want it? Is it worth seven times what it costs? That is what a single dollar is worth invested at 10% return in 20 years.
Your One River Ran Dry - We live in the era of entrepreneurship. Regardless of the job or business your kids choose, they should be involved in generating multiple streams of income from a variety of enterprises.
Your House is Bigger Than Your Wallet - Mortgage companies use a calculation to determine if you can afford the mortgage payment, it is called Debt-to-Income ratio (DTI). This is one of the numbers that became too "flexible" over the past few years, allowing people to get into houses they couldn't really afford. This is also their standard and doesn't have to be your kids' standard.
You Exposed Your Eggs - How many times have you heard you need to have a diversified investment portfolio? Well, do you? Even though that mantra has been repeated throughout our financial culture, most people are 90%+ invested in a single asset. Teach your kids not to do this. They need to be aggressive in earning money and conservative in keeping it.
You Didn't Grow Your Money Tree - The most important investment you can make in securing your long-term financial viability is the investment in you and your personal development. In these fast-moving and ever-changing times, the degree on your kids' wall is marginalized within a few years. After graduation day, learning should not only continue, but accelerate. It will be your kids' continual growth and development that will make them financially secure and viable in the future.
Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!
Originally published in Success magazine.
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- We all want to pass on a legacy to our children. But what are we passing on? Are you passing on financial savvy or financial ignorance? Think about it.
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