These 4 Traits Can Turn Your Child Into a Money Mastermind

BY: - 18 Aug '17 | Money

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You want the best for your children. So what can you do to ensure they become adults who are happy and prosperous, rather than ones who are stressed out, living paycheck to paycheck?

Teaching them about saving, debt, and compound interest is a good start; but instilling them with the right attitudes and mindsets is even more important. That’s because psychological failings underpin most of our money failures. So, if you want to do it right and train up a money mastermind, practice these four habits.

Stress an Attitude of Gratitude

Who hasn’t fallen into the trap of wanting more? It’s human nature. We’re constantly seeking more clothes, better electronics, a larger house or a newer car.  But sometimes, if you just sit back, you realize that you have more than enough.

Appreciating all the blessings that adorn our lives is the antidote to reckless financial spending. Appreciation turns your attention away from what you don’t have and toward the abundance that’s already present in your life.

Stress appreciation as a part of your child’s life. I, for instance, am a believer in encouraging my children to list three things they’re thankful for before they go to bed. It could something as simple as their beloved stuffed animal Fluffles or the favorite meal they ate for dinner.  Creating a lifelong habit of gratitude will help insulate your children from the effects of our consumer driven society.

Foster an Appropriate Sense of Self-worth

Too many people seek validation through their material possessions. The late model car sitting in the driveway serves as a badge of success. The large house on the corner lot shows that you’ve “arrived”. The clothes you wear belay your importance. But, in the process we sacrifice financial freedom for the momentary validation our possessions provide. This is a curse that should never be re-visited upon our children.

I plan to encourage my children to derive their self-worth from things other than their material possessions. Being kind, empathetic, generous, and Christ-like will be vitally more important to them than the type of car they drive or designer name tag they sport.

Help Them Develop Self-Discipline

In the 1960s, psychologist Walter Mischel conducted the Marshmallow Test in which four year olds were placed in front of a marshmallow. They could eat the treat or wait fifteen minutes and receive an additional marshmallow when the researcher returned to the room. Many children ate their marshmallow immediately. Others held out for as long as they could before succumbing to temptation. But some waited the required fifteen minutes and received their additional marshmallow.

Decades later it was found that the children who had successfully delayed gratification by waiting the full fifteen minutes to receive a second marshmallow were also more successful later in life.

Many of our financial problems center over our battle to delay immediate gratification for greater rewards in the future. We’re tempted to purchase that beautiful handbag with our high interest store credit card, even though waiting until we’ve saved up for our purchase is always the smarter choice. Those that approach their finances with a higher level of self-discipline will always be more successful.

You can foster the self-discipline muscles in your child. It may be as simple as never giving in to your child’s demands for their favorite toy on the spot. Instead, make them save their allowance to purchase the object of their desire. Research also concludes that games with inherent rules help build the self-discipline muscle as does encouraging your children to engage in activities that nurture self-discipline like sports, playing an instrument, or doing assigned chores.

Foster the Right Mindset

Carol Dweck is author of Mindset, one of the most groundbreaking books on learning and achievement. Her work describes two types of mindsets, the fixed mindset and the growth mindset.

The fixed mindset is one in which we believe our talents and abilities are fixed or inherent. “He’s so smart” or “she’s a natural” are expressions conveying such a mindset. The problem with the fixed mindset is that we become trapped by our labels. A smart child becomes afraid of intellectual challenges because any failure might challenge their label of being intelligent, and thus affect their self worth.

The growth mindset, on the other hand, believes that any ability can be learned and fostered with enough hard work. A child is not “naturally intelligent” but, with enough effort and practice, can become brilliant at math or science. The beauty of the growth mindset is that it encourages work and embraces challenges. More importantly, the growth mindset sees failure as a natural stepping stone to success rather than an attack on their self worth.

By encouraging a growth mindset in your children you allow them to view success in any area of life as a possibility, as long as they are willing to work hard enough. In this way no high paying career field or entrepreneurial challenge appears unachievable .

BMWK, what mental habits or mindsets are you fostering in your children?

About the author

Alonzo Peters wrote 296 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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Wealth Building Secrets for Those in the 9-5 Rat Race

BY: - 23 Aug '17 | Money

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Have you become a sucker for the American Dream? You know that quaint little myth which implores you to find a good job, work hard, and live life well in your nice home in the suburbs.

The unfortunate reality is that a 9 to 5 job will never allow you to bask in the afterglow of financial freedom. In many cases, a JOB stands for Just Over Broke. Simply ask the 127 million working Americans who often struggle to make ends meet.

Nearly half of all Americans are living paycheck to paycheck.
66 million Americans do not have the savings to cover even a small financial emergency.
69% percent of Americans have less than $1000 in savings.
American households with credit card debt owe, on average, more than $16,000 in such debt.
About 50% of American families do not have a single cent set aside for retirement.

Clearly, grinding away at a job is not working for everyone. With so many struggling just to make ends meet, it’s no wonder few people get rich working a 9 to 5.

Unfortunately, you’ll never save your way to wealth either. That’s probably why you’ve never heard of the coupon millionaire. Forgoing your favorite Starbucks latte won’t make you millions.

So if you’ll never get rich working at your 9 to 5 job or get rich by cutting coupons, why do I often stress maximizing earnings at work and living frugally as pathways to financial freedom? Why do I encourage you to become indispensable on the job; to do what ever you must to garner the raises you deserve, and obtain the skills crucial for higher paying positions? Why do I stress frugality? Why is it so important downsize the cable bill, trim your phone bill, and renegotiate your car insurance?

To understand why, you must first appreciate the most important wealth building formula of all time:

Income – Expenses = Capital (seed money) left over to invest in wealth building assets.

Your trajectory out of the rat race begins when you realize that it is capital (seed money) invested in wealth building assets that truly propels you to financial freedom. This is how the wealth game is played.

The more raises you earn or promotions you garner at work the higher your income grows, ultimately resulting in more seed money left over for investing. Reduce your expenses by frugally cutting your living and entertainment expenses, and you also create more seed capital to invest in wealth building assets.

Your job and frugal living will not make you rich, but they are the means for creating the seed money which you can use to truly build wealth.

What do you invest in once you have accumulated your seed capital? Consider these wealth building assets:

Stocks – Warren Buffet, one of the wealthiest investors in the world, suggests that you invest in simple low risk index funds, which over time will help make you financially independent.

Real Estate – Our population is always growing, but the amount of land in the US remains a constant. That’s why fortunes are made through real estate.

Bonds – Corporations, cities, states and the US government all borrow money. When you lend them money in the form of bonds, you’re the one earning interest and smiling all the way to the bank.

Intellectual property – Use your seed money to build your own app, create your own software, write your own book, or create your own website that will continue to earn you passive income in the future.

Businesses and Side Hustles – Everyone has a talent, expertise, or experience that people are willing to pay to gain access to. Find your talent or expertise, and then use your seed money to get your business or side-hustle off the ground.

The vast majority of Americans toil at their jobs on financial treadmills going nowhere fast. You don’t have to be one of them. Understand that financial freedom is gained by spending less than you earn and investing the difference (seed money) into wealth building assets. Work to earn more on the job and cut down your expenses through frugality and you’ll create even more seed money to fuel your wealth building.

BMWK, how can you earn your piece of the American dream?

About the author

Alonzo Peters wrote 296 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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