How do you prepare your children to be financially responsible adults?
This book will give you a roadmap to answer important questions like those below, while providing you with fun ways to teach your children about money management. They will be learning important lessons without even realizing it – whether they are a toddler or a teen. You will learn through stories and examples how to accomplish the following goals and many more.
• How do you teach a two-year old the value of money?
• How do you help your children plan to get what they want?
• How can your child recognize the value of delayed gratification?
• How do you teach your child about making choices and budgeting?
• How do you prepare your child to be financially ready to leave the nest?
• How can your teen build their own credit score?
The goal of this book is two-fold. First, to support you in educating your children to have an empowering set of beliefs and knowledge of basic finances so that they are competent in most economic life situations. This book can serve new parents as a financial parenting guide as well as help parents with teenagers teach their teens critical skills needed to transition to financial independence. Our second objective is to walk you through the mechanics of setting up basic accounts and practices that give your child a financial cushion when it is time for them to live independently. The following are goals that we expect you and your kids to achieve from reading the book.
• Your child is financially aware.
• Your child weighs the pros and cons of using their money in various situations in a way that you believe is in their best interest.
• Your child is not afraid of money.
• Your child is comfortable in going to banks or investment firms to get more information, open accounts and ask for support.
• Your child understands the benefits of delayed gratification.
• Your teen has the financial knowledge and ability to budget when they leave their childhood home.
• Your teen has a good credit score as soon as is practical.
• Your kids have developed habits and patterns of behavior around making and spending money that serve them well throughout their life.
Each chapter includes financial education appropriate to your children’s ages, along with the mechanics of what investment accounts or practices you may put in place to solidify your children’s future financial well-being. Exercises and examples are included throughout to stimulate your thinking on how best to teach and engage your kids. Many of the exercises are directly applicable to practical skills such as budgeting. Stories that demonstrate the financial parenting strategies of other parents provide ideas that may inform your personal financial teaching approach. Seeing how parents have already educated their children provides a welcome realization that this is just a part of the parenting experience.
Raising Financially Independent Children was written in response to widespread insolvency and financial illiteracy among the young and older adults alike. The book is written for parents of young children but is suitable for anyone who would like to change their relationship with money, or who needs a refresher on the basics of credit and simple account management. By presenting easy ways to educate your children from their earliest years, we are confident the next generation will be better prepared to navigate the financial challenges of modern life.
Targeted Age Group:: 20 to 40 year old parents
What Inspired You to Write Your Book?
I have partnered with a friend, Irene Van Dyk, and used this time when we are all at home to write a book I have wanted to write for a very long time. For some time, I have realized that many children receive no or little financial education and leave the nest unprepared for their future financial well-being. The final push was was the outcome for 2 different 20-year-old young men that needed to rent houses or apartments in tight rental markets. One was a college student with a 740 credit score the other worked at a large chain store and did not have a bank account. The college boy moved to the front of the list ahead of 4 other teams when the landlord learned not only his credit score but that he had been paying his a credit card since 14. The boy with a 3-year job history and NO credit had to live in a youth hostel for 6 months while he established credit
This book will give you a roadmap to answer important questions like those below, while providing you with fun ways to teach your child about money management. Your children will learn impactful lessons without even realizing it – whether they’re a toddler or a teen.
• How do you teach a two-year old about saving up money?
o In Chapter 3, read how Rosa took two-year-old Juanita with her to sort the recycling each week, putting her share of the money in a bottle to save up for a future toy.
• How do you help your child plan ahead to get what they want?
o Chapter 3 includes the story of four-year-old Max, whose mother had him save a quarter each time he did a chore. When he had enough, he could buy his favorite warm cookie from the grocery store.
• How do you teach your child about budgeting?
o Discover how Linda’s parents helped her create a budget when she was six – see Chapter 4.
• How do you prepare your child to be financially ready to leave their childhood home?
o The book highlights two stories about boys renting their first apartments – one had a high credit score and experience paying bills and the other never had his own checking account. Both were looking in highly competitive housing markets. Read about Bill in Chapter 1 and Hakim in Chapter 7 to learn the drastically different outcomes.
Raising Financially Independent Children was written in response to widespread insolvency and financial illiteracy among the young and older adults alike. The book is written for parents of young children but is suitable for anyone who would like to change their relationship with money, or who needs a refresher on the basics of credit and simple account management. By presenting easy ways to educate your child from their earliest years, we are confident the next generation will be better prepared to navigate the financial challenges of modern life.
Chapter 1 – The Goal
The goal of this book is two-fold. First, to support you in educating your child to have an empowering set of beliefs and knowledge of basic finances so that they are competent in most economic life situations. Second, our objective is to walk you through the mechanics of setting up some basic accounts and practices that give your child a leg up when it is time for them to leave your nest.
• Education Goals:
o Your child is financially aware.
o Your child weighs the pros and cons of using their money in various situations in a way that you believe is in their best interest.
o Your child is not afraid of money.
o Your child is comfortable in going to banks or investment firms to get more information, open accounts and ask for support.
o Your child understands the benefits of delayed gratification.
o Your child develops habits and patterns of behavior around making and spending money that serve them well throughout their life.
• Account Management Goals
o Your child has accounts set up in their name at the appropriate age.
o Your child has an emergency fund with enough money in it to start living independently and managing through the inevitable ups and downs that life brings.
o Your child has a credit card and good credit when entering the work force and is able to maintain that.
o Your child develops the habit of buying only what they can pay for, and then paying their credit card bill in full every month.
Many of us did not receive any formal education in “money.” Schools leave it to parents and guardians, and parents in most cases did not receive any formal education to pass along. So, parents figure it out on the fly, with mixed success, and often by asking their peers who also had little to no education. Each parent’s earliest beliefs about money come from what they observed in their households as they were raised. Children saw who makes the money, who decides how the money is spent, and whether money is to be feared, or hoarded, or spent immediately. Their parents often lived through depressions or recessions or wars, and developed emotions about money based on their worst fears realized. And because of that, money often comes with so much uncomfortable emotion that it is not talked about much with anyone. Even couples often do not share much information about money and may have completely different views about it, although their views in other areas may be very much alike. This is a typical story that we encountered, and that we address in this book.
Bill, now a 20-year-old, was raised by parents who gave him no financial guidance and hid the fact that they were struggling financially. Bill did not work until after he graduated from high school. Several months after high school ended, Bill finally got a job as a clerk at a national retail chain. This store gave employees two ways to get paid, either direct deposit to a bank account or money in the form of a debit card they supplied. Bill chose the debit card. Three years later Bill decided to transfer to New York City, on the opposite coast from where he grew up. Bill thought he was prepared as he had saved enough money on his debit card for one month’s rent and one month’s security deposit. The rental market for reasonably priced apartments or rooms in New York was very tight. First, Bill and his three friends tried to get a two-bedroom apartment; only one had any credit score. All the landlords required credit scores for all tenants. The same happened when Bill tried to rent a room alone; again, he was asked for a copy of his credit score and a list of bills he paid monthly. At this time, Bill listened to some advice and opened a bank account, had his pay deposited to it, and got a $500 limit credit card from the bank. Bill ended up sleeping on couches or in hostels for six months until he had some credit and was able to rent a room.
When we look at Bill’s situation, we see that he prepared for his move, but simply was not aware of what was fully needed to succeed. His education did not include understanding credit, nor did he have a sizeable emergency fund to cover him when unforeseen circumstances came into play. Fortunately, he eventually did get some good information and landed on his feet. By following the steps outlined in this guide, we provide a basic education and foundation so that your child does not have Bill’s experience.
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