Steps To Empower Your Child
The mentors are, Robert & Kim Kiyosaki, Sharon Lechter and Diane Kennedy, all self-made millionaires. Robert and Sharon are co-authors of the best selling "Rich Dad: Poor Dad" series. Kim Kiyosaki is one of the co-founders of Cash Flow Technologies and is a passionate advocate for educating women about money. Diane Kennedy is a specialized accountant. Here are some practical insights into how the rich handle their money and some of the ways they pass their good money skills on to their children:
1) MONEY IS JUST AN IDEA
Robert Kiyosaki believes that ideas create wealth. "The single most powerful asset we all have is our mind. If it is trained well it can create enormous wealth in what seems to be an instant."Encourage your child's creative ideas. Help them to explore them, define them, and when appropriate, develop a plan of action to make their ideas come alive.
2) ATTRACTING MONEY
Robert, Like Napoleon Hill, author of "Think and Grow Rich," believes that what you think about is what you become. He believes in the law of attraction. Which means, if you are thinking you do not have enough money, then "not enough" is just what you'll attract. If you want to attract more dollars into your life then you have to become friends with money. You have to feel good about money, and one of the best ways to attract MORE into your life, is to feel good about what you already have.
3) FEEL GRATEFUL FOR WHAT YOU ALREADY HAVE
People often tell themselves that if they only had more money, or a bigger house, or a better car, everything would be ok. But these mentors ask "If you're not happy with what you have NOW, how can you be sure you will be happy with what you have LATER?" They suggest that you practice noticing how rich you are right now and how lucky you are to be able to spend so much time with your children. Take your focus off of what you DON'T have and think about what you DO have.
4) SET FINANCIAL GOALS WITH YOUR CHILDREN
According to Sharon Lechter, "By setting financial goals with your children and helping them determine a financial plan to achieve those goals, you instill the formula for success. The self-esteem that is built when they achieve those goals is priceless. Teach your children to say, "How can I?" instead of "I can't." For example, if your child wants a new bike, help him/her develop a plan to think of ways to earn money. Help assess your child's progress along the way and make adjustments to the goal as needed. Then, have your child purchase the bike as his/her ultimate reward for completion of the plan.
5) TEACH YOUR CHILDREN TO USE CREDIT CARDS WISELY
Make sure your children know how to use a credit card BEFORE they leave home! According to Sharon Lechter, "children are bombarded with 'just charge it' messages every day. Parents need to complete the picture for their children by exposing them to the other side of credit. Have them pay the bills with you, explain the multiplying impact of the interest charged on the balance due." As Diane Kennedy puts it, "If you went into a store to buy an item, would you naturally go to the bin marked PRICES INCREASED 20%!? Of course not, but that is what the consumer does when they buy on time with a credit card." These mentors also remind us that credit cards can help make money. Diane uses an airline credit card to earn free trips, and Sharon uses her credit card to make her accounting easier. The trick, they say, is to make sure you pay off the balance each month.
6) ALLOWANCES: TO GIVE OR NOT TO GIVE
Sharon Lechter believes that if you give your children an allowance, it is vitally important how the allowance is set up. "Will the children view the allowance as an 'entitlement' or as earned compensation for completion of agreed upon tasks or responsibilities? For instance, consider the difference between these two statements, 'John, since you are 12 now, you are old enough for an allowance. Every Friday I will give you an allowance of $10 to spend however you would like.' Or, 'John, you are busy with your homework and sports activities every night and we want to acknowledge your efforts and encourage you. While you are busy with these activities, we will give you an allowance of $10 per week for spending money.'"Robert Kiyosaki believes that if you give a child an allowance, you are training them to be an employee and if you pay them for jobs, you are training them to be self-employed. He further believes that the best financial training you can give your child is to help them develop their entrepreneurial spirit.Diane Kennedy, relates from her accounting experience that many of the nation's wealthy legitimately employ their children (ages 8 and up) and pay them a tax deductible salary. Diane's father taught her to do the bookkeeping for his numerous businesses when she was 12 years old. This became a tremendous advantage for her later in her life. She learned very quickly how to read and understand financial statements. She used her knowledge to buy her first home when she was 20 and her second (an investment) when she was 22.
7) TEACH YOUR CHILDREN THE POWER OF PASSIVE INCOME
"What you do from 9-5 is your job. What you do with your paycheck is your business." This is the heart of Robert Kiyosaki's Rich Dad: Poor Dad philosophy. The earlier your children understand the difference between working for others and working for themselves, the better chance for financial success they will have.Homeschool.com recommends the board game "Cash Flow for Kids" (see reference below) because it shows children that they can either spend all their money on doo-dads (things they think must have!) or they can use their money to bring in more money. Passive income is money that comes to you without you physically having to go to work for it. Examples of passive income include royalties on books or songs you've written, rental income from apartments you own, or interest payments you receive from money you have loaned to others. The goal of "Cash Flow For Kids" is to become financially free. The winner is considered "free" when their passive income is more than their expenses. Imagine what your children could accomplish in real life if they were financially free. They might become actors, artists or writers, without starving. They could follow their passions in life instead of working at a job they hate just to make ends meet.
8) THE THREE LITTLE PIGGY-BANKS
These financial mentors suggest using a three-piggy-bank approach with children. One bank is for giving, one is for savings and one is for spending.
GIVING
When your child has some money, automatically put 10% into the giving bank and then divide the rest into the savings and spending banks. The benefit of the giving bank is that by giving to others the child is reminded of how fortunate they are.
SAVINGS
Next, "match" the amount your child puts into the savings bank since this will increase their savings more quickly and reward their efforts. When your child's savings bank gets large enough, you can transfer it to a real bank account where your child can see the power of interest payments. When this account gets even larger, you might again "match" your child's funds and help them invest in a small piece of property or perhaps some child-friendly stocks
SPENDING
Don't underestimate the benefits of the spending bank. After all, how can a child understand "worth" if they don't have the freedom to make a few bad purchases?Ensuring that your child has strong financial skills is critical to his/her future success. The advice from the mentors in this newsletter will help you start your child on the right path, however the first step of developing strong financial skills is developing strong math skills. Without strong math skills, how will your child read a profit and loss statement, know how to calculate interest, balance a monthly budget or know when someone could be cheating them? Strong math skills go hand in hand with financial intelligence.
By homeschool.com
http://www.homeschool.com/articles/Mentors/default.asp
