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Are you teaching your kids to build wealth or debt?

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by Paul Kindzia in Happiness, Health, Personal Finance
June 14, 2022

One of the most often justifications for making poor financial choices is saying that, “I do it for my kids.”

  • I live in too expensive of a home, but I do it for my kids.
  • I spend too much on gadgets, but I do it for my kids.
  • I spend too much money in general, but I do it for my kids.

What exactly are you teaching your kids when it comes to money?  Are you teaching them that budgets are something only companies use in their finance department?  Are you teaching them that it’s ok to spend money whenever you feel like it on whatever you want?  Are you teaching them to use credit cards instead of cash? Are you passing on bad behaviors to the next generation who at that point are only more likely to follow from your example?

Having children and raising them in a consumer-based economy can be difficult because kids don’t have the same maturity as an adult.  Kids want the newest iPhone or gadget so they fit in.  They want the designer clothes so they fit in. They want the new car so they fit in. Regardless of the item, cost or budget they just want to fit in and blend.   They are also very susceptible to peer pressure.  Who doesn’t want to be cool?  Who wants to be an individual and unique when young?

If people are honest with themselves, what they really want for their kids is to be happy.  If we take it one step further, we really do want our kids to be more responsible for money and to realize that being broke, having debt and feeling stressed and anxious really stinks.  That’s why so many parents try and convince their kids to become doctors and lawyers even though they have no idea how many doctors and lawyers aren’t happy in life.  The assumption is that if you have a career with a higher than average paycheck, then happiness is sure to follow.  It’s all based on income and job security.  These simply aren’t valid beliefs.

When we do dumb-dumb things with our money we are teaching our kids something.

  • Kids observe things.
  • They pick up things.
  • They learn by watching.

When you spend money recklessly and on things like expensive homes that you can’t really afford what you are really telling your kids is, “Hey kids, look, we can’t afford this place and we have no money for other things and it’s probably obvious to you that your parents are unhappy and stressed, but this is what you do in life.  Follow my lead when you grow up kids.  Borrow money out your ears until it makes you financially depressed.  Really pour that concrete around your feet and up to your waist so that you really become financial stuck in life and deplete most of your options.  And do me one more favor.  Make sure you pass on these pearls of financial wisdom to my grandchildren.  You hear me?”

I can’t believe how many parents teach their kids (by not teaching them anything at all) that they aren’t to worry about their future, just keep spending money and flushing it down the toilet and it will all work out.  Maybe we can all get our kids to file bankruptcy at an earlier age than us.  Whether or not you want to fully acknowledge this, it is exactly what you are teaching them if you take this approach.  You are setting them up for future failure because kids learn by watching and observing.

It is never too early to start installing principles around money in your kids. Start with the basic 7 that I have listed below:

Wealth Principles:

  1. Make a strong living

  2. Live below your means

  3. Save consistently and adequately

  4. Eliminate debt

  5. Maintain adequate emergency funds

  6. Invest prudently

  7. Maintain proper risk management in all areas of your life

Teach your kids the truth.  The truth is that principles matter.  Teach them about the perils of debt.  Teach them the importance of saving consistently.  Teach them to track their spending and savings balances.  Teach them that how they behave with money is more significant than becoming a doctor or lawyer.

I get to see the household finances of doctors and lawyers.  They often aren’t impressive.  Maybe they just believed what their parents told them which is that it doesn’t matter what your financial principles are.  All that matters is that you became a doctor or lawyer and happiness and wealth is forever yours.

If only that were true.

If you teach your kids at a very early age how to BUILD WEALTH INSTEAD OF DEBT you will be installing habits for life. Look the truth is life is hard.  Why make life harder for your children then it needs to be? Imagine if your parents had taught you how to build wealth instead of debt.  Would your life be different today?

Good habits lead to good behaviors.  Good behaviors lead to good decisions.  Good decisions lead to a good life.  Live by principles and choose wisely.

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These are the EXACT same steps I used to PERMANENTLY get rid of my mortgage, student loans, credit card debt, and auto loan debt.

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