“The moment you make passive income and portfolio income a part of your life, your life will change. Those words will become flesh.” – Robert Kiyosaki
Are you wondering how to teach your kids about money?
Maybe you’re wealthy and have resources.
You want to prepare your kids for a great future and help them to make good choices.
I’ve seen too many friends and family members who have spoiled their kids.
It hasn’t turned out well.
When you talk to your kids about money, it’s important to plan out what that conversation looks like.
You should know how to prepare them.
Let’s talk about several secrets you can do to change your life.
We’re going to go over it all in three easy steps.
1. Start Having Conversations When They’re Young
The first thing you have to remember is to start when they’re young.
Don’t start when they are 18 years old and getting ready to leave the house.
The reason for this is because it takes time for kids to learn what money really is.
If every talk about money involves you giving kids cash, that’s not going to prepare them for life.
One of the reasons this is really important to me is my eight-year-old daughter.
My daughter, Ellie, is the most important thing in the world to me.
I want to prepare her for being successful in life.
I want her to be taken care of, but I also want her to be able to manage money.
I give her some money, but I don’t give her too much money.
She also has some drive to be successful and not live off prior generations’ resources.
When that happens, I think it’s a real tragedy.
If you’re not familiar with Rich Dad, Poor Dad, I highly suggest that you read it.
I also suggest you get the kid’s version and read it with your kids.
It goes over the idea of teaching children valuable financial lessons.
We can have the best ideas about money in the world, but our kids are watching what we’re doing, what we’re saying, and how we’re viewing money.
We teach them what we know, but we reproduce who we are.
If you’re a somebody who handles money a certain way and say:
What kinds of things am I teaching my children?
Will it always be available?
Is money some sort of trust or stewardship that I have to be faithful with?
These are all things just to really consider when you look at how you handle money.
Kids are always learning.
They’re like little sponges.
Even things you don’t think they’re paying attention to, they are paying attention to.
Think about the person, the parent, the individual you’re becoming.
That’s what you’re going to reproduce.
If you’re selfish, self-focused, or stingy, your kids are going to see that whether you like it or not.
If you’re somebody who’s generous, has a wealth mindset, or you’re helping others…
If you’re asking how you can create more and impact in the world…
Those characteristics will become apparent to your kids.
It’s important that we talk about money.
We can talk about how people can squander money.
We can talk about struggles we’re going through with money.
These are really subtle things, but they send a strong message to your kids.
A useful anecdote might be:
When you’re at a store and your kid wants a toy, you might say you can’t afford it.
Don’t say this to your kids if it’s not true.
Personally, I can afford to buy a lot of toys.
I tell my daughter we can afford to buy them but we’re choosing to do other things with it.
We’re choosing to invest.
We’re choosing to pay for our house.
We’re choosing to pay for trips.
For a kid, when you say we can’t afford something, what do they hear?
Their minds might go to thoughts of:
“We can’t afford that. We must be poor. We must have no money.”
Getting your kids in the mindset that you’re poor, isn’t the best way to have them feel.
Now, if you really can’t afford it, you can absolutely say that!
But if that’s not true, rethink your wording.
It’s very subtle, but it’s a way to show kids we can have restraint.
2. How to Prepare Your Kids for Being Wealthy
What’s really important is to tie money to work.
A friend of mine says if you love your kids, you’ll give them your time.
If you don’t love your kids, you’ll give them money.
Doesn’t that hurt?
Our time is really important to give to our kids.
That’s how they see the love from us.
The messages we’re sending are important.
When you tie money or value to work you’re teaching kids that money has value.
It’s not something we can blow on whatever we want.
There’s actually value tied to it.
With my eight-year-old, I try to do money lessons.
We live in California where they charge you 5¢ per can for returnables.
The thought is you go and put them into a machine one by one, and it gives you money back.
I thought that was a great way to really teach my daughter about money!
She has a manual task of putting them in the machine and realizing that money comes after work.
After LA shut down those machines, I did have to tweak the lesson a bit.
We now go to recycling centers, but she’s still involved in that process.
Another thing you can do with your kids instead of just giving allowance:
You can make a list of things they can do to earn money – $5-10 per week.
From there, you can build up the amount they earn.
This can even act as a lesson in inflation.
When I was a kid, my dad had me and my brother do dishes.
That was how I got my $2/week allowance.
It really built some work ethic into my way of thinking.
I’m very grateful to my dad for that.
Remember: Tie money to work or value if you choose to pay your kids.
3. Share Your Investments with Them
Talk about your investments with your kids.
Talk to them about the returns.
Talk to them about IRR.
Let them invest with you if it makes sense.
Even if you put money in for them, they’ll be able to see how it all works.
You’re going to see some of the cash flow from it as well!
It might take extra work to figure all that out, but the lesson is really valuable.
I actually know a pretty well-off guy who has four kids.
He bought a rental house for each of his kids.
He’s letting them basically manage the entire thing while he continues to own the properties.
But when they’re 18, everything is theirs.
Up to that point, you’re handling the cash flow, repairs, and working with a property manager.
What that does is give kids the opportunity to see how passive income actually works.
I think that’s a really cool idea!
You can take your kids to conferences and meetups.
Sometimes bribes might be needed, especially with younger kids.
If you take them to a media meetup, afterwards you can go out for ice cream.
Get kids around different types of ideas and concepts and into things they’re not used to.
It’s amazing what things will open up when you’re able to do that.
But what about resources?
How can you help your kids do well with your legacy?
There’s a couple of choices here.
You can leave everything to your kids.
A lot of people will do this.
If that’s the case, you better make sure you teach your kids well.
I think that’s probably the harder way to do it.
Another way to do it is giving the kids some of your legacy, but then some goes to a cause.
To me, I’m going to give a lot of my wealth away to fight human trafficking.
My daughter will also get a portion.
I think it’s important to have a plan around where your money will go.
It’s important to teach your kids because this stuff doesn’t happen by itself.
Wealth does not get passed down from generation to generation without good structure in place.
I want to end by bringing your attention to the featured quote of this post:
“The moment you make passive income and portfolio income a part of your life, your life will change. Those words will become flesh.”
The moment you decide that you’re actually going to get passive income, your life changes.
This is for your kids as well.
The moment they see that, something really starts to become alive.
Now, I want to hear from you!
What was the most beneficial thing that you got out of this?
What are some things that you are teaching your kids?
Put that down in the comments below and let’s start a conversation!
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.