Growing up, conversations around the dinner table never involved financial matters. There were no debates about the best ways to save money or discussions on how to identify the best stocks for long term success.
School was no better. Somehow, amidst the countless hours of calculus, American history, and English literature, the topic of personal finance was all but forgotten. It’s ironic since this subject has a most profound influence on all our lives.
Unfortunately, the school of hard knocks became my best teacher. But I’m certain that I wasn’t alone in my lack of a solid financial education.
That’s one of the reasons I have vowed that my children, when I have them, will understand the rules of the money game straight out of the gate. Over the years, I’ve compiled the money lessons that I will teach them at an early age so that they can live truly prosperous financial lives.
So what pieces of advice will I make sure they are armed with as they venture out into the real world?
Don’t follow the crowd
If most people aren’t wealthy, why do we follow the examples of most of the people around us? Following the crowd is easy. It requires little thinking and less effort. But, following the crowd is the surest path to financial disaster.
My kids will understand that becoming financially fit isn’t hard, but it isn’t easy either. You have to take the time to do what the crowd refuses to do: track your spending, follow a budget, avoid buying on credit, and save and invest a percentage of your income.
Financial guru Dave Ramsey sums it up best when he suggests that we, “Live like no one else today, so we can live like no one else tomorrow.”
Become an owner
The simple truth is that, in America, financial prosperity is linked to ownership, whether it be ownership of stocks, bonds, real estate, an interest in another business, or even ownership of our own business.
Unfortunately, in the Black community we’re trained to be consumers rather than owners. We’d rather buy Coach handbags than purchase Coach stock. We’d rather let others build businesses in our very own communities than start our own.
We’re often conditioned that the best way to wealth is to get a good 9-5 job. Yet, with the exception of the occasional CEO, the way to true wealth is always through ownership.
Think about it. The richest people in America made their fortunes through ownership. Warren Buffet became rich by way of stocks. Donald Trump rode the real estate train to wealth, while Oprah built a business empire on the way to becoming one of the wealthiest women on the planet.
I plan to teach my children that owners major in wealth, while consumers major in debt. The richest people in the world did’t get wealthy by mastering the art of consumption.
So how will my children become part of the ownership society? They’ll have to spend less than they make. Then, they can use what’s left over to invest in wealth building ownership assets.
Master the art of self control
“God has equipped you to handle difficult things. In fact, He has already planted the seeds of discipline and self-control inside you. You just have to water those seeds with His Word to make them grow!” – Joyce Meyer
The greatest challenge to financial freedom is self control, for it is the lack of self-control that has us buying things we can not afford and purchasing those things that we really do not need. The ability to delay gratification and to distinguish a “want” from a “need” are the best skills any parent can hand down to their child.
Don’t let your possessions define you
Too often our self-esteem is tied up in what we drive, who we wear, or where we live. This dangerous trap destroys any hopes of achieving financial freedom.
Too many people spend money they haven’t earned … to buy things they don’t want … to impress people that they don’t like. – Will Rogers
Unfortunately, the Black community seems to have a special affinity for this affliction, sacrificing financial stability for the fleeting validation that material possessions provide.
I will be sure that my children derive their self-worth from being competent, God-fearing, empathetic human beings, rather than from owning material possessions. This will free them up to be more concerned about the type of retirement account they own instead of the type of car they sport.
BMWK, what are some of the money lessons that you’ll make sure to teach your kids?