Prepare your kids for wealth

By James Marshall Contributing Writer

We talk a lot about generational wealth and leaving a legacy of financial stability. But what good is it to leave money or wealth to your children if they have little or no idea how to manage it!

Teaching your children to respect money is just as important as teaching them to respect their elders. Constantly encouraging them, and giving them the resources to complete their education goes hand in hand with their ability to properly manage their finances.

It is important to instill in them a family tradition of wealth building and wealth transfer. It should not be happenstance or an after thought. It should be deliberate and structured.

So let’s talk about how to prepare your kids for wealth

I believe you should start teaching your kids about money management as soon as they are old enough to ask you for money. And that lesson should always start with the basic tenet: “A penny saved, is a penny earned”

This phrase means that it is as useful to save money that you already have, as it is to earn more. The phrase “a penny saved is a penny earned” comes from Benjamin Franklin’s series of books, Poor Richard’s Almanack. With advice, helpful hints and puzzles. These books are still relevant today!

To respect and value that penny they have saved, it has to first be earned! Start the lesson of money management by first teaching your children the lesson of work!

If you don’t talk to your kids about money, someone else will. And it might me the Kardasians!

Try to avoid lecturing, and don’t confuse financial literacy with how much wealth your family has or does not have. Financial literacy is knowing the value of money and how to keep and grow it. Skipping the financial literacy will be like learning to drive a car without learning the difference between the gas pedal and the brake, and when and when not to use them!

It’s not glamourous, but teach your children about the enormous impact of compounded interest and the amazing generational wealth building power of life insurance.

Clearly explain to them the concept of the four cornerstones of wealth: 1) Budgeting and cash reserves 2) Protection 3) Equity management 4) Investment income management

Make resources available to your children to help them understand the concept of money, savings and investing. There are a lot of free resources available to help you with this education: • coolkids.org • Dallasfed.org • jumpstart.org

And of course you can check out my financial cartoon “Investing with Larry Living Large” on my YouTube channel “James Marshall, Financial Educator.”

What we are trying to accomplish with this video is to give young people a basic understanding of how capitalism works. How wealth is built through the ownership of companies on the stock exchanges. As well as how companies get the capital (or money) they need to grow. When you understand the process it’s easier to become a part of it.

Manage the process, control your money and build wealth!

The bottom line is don’t leave it to chance. And don’t leave it to others. Start teaching your children about responsible money management now!