Here are a few tips to help you to raise a millionaire.
Hey Junior, this is Money
It is never too early to teach your children about money management.
You can start by showing to your preschooler how you use money to make your daily purchases. You can start by explaining that when you buy the groceries you give them the money and you can then take the groceries home. There are various variations on this theme. You can take your child to an ice-cream shop and give her the money to pay for the treats whilst explaining that you can have the ice-cream if and when you pay for it.
It is also important to teach a child where the money comes from. Up until a couple of years ago, my daughter thought that whenever we need money we can go to the ATM machine get however much we want. Teach your child that you go to work and get paid for the work you do. Clearly explain that if you don’t go to work you don’t get money and therefore cannot buy the all the things we need for your daily life.
Once your child knows how to count you can teach her how to sum up the money in the piggy back in order to figure out how much she needs to buy a particularly coveted toy.
The idea is to explain your child that money does not come from trees or, in my case, from the ATM or the bank teller. It is vital that the child understands the mechanics and dynamics of money management.
Encourage the entrepreneur in your child
Your money education should not only include work. I personally believe that the most important money skill to have is not to go to work, earn it, save it / invest it. I believe in passive income, which is a totally different beast and in some ways very hard to acquire.
Encourage your child to believe in her ideas and to pursue them with potentially a business mindset. It is very important not to discourage your child. If your child is really passionate about something, say computers, encourage your child to be creative and to pursue her dreams. Encourage the entrepreneur spirit.
The real money is in passive income. Your child needs to learn how to make money from passive sources.
Get your child to work for the money
Start teaching your child that it is very hard to earn money. It is very hard to get your earned income and even harder to get passive income.
Create a system whereby your child can earn cash by doing some work around the house. You can make a list with the tasks and how much she will earn for each task she completes.
Another interesting strategy is to set objectives. May be to earn 5$ by the end of the week. This way your child can work through the process of setting a target to purchase something and work for the money to pay for it.
Help your child by setting up a savings account
If you have the cash you may consider small monthly contributions to a savings account in your child’s name. This can certainly go a long way and you can take advantage of compounding interest over the time of the investment.
Start with this strategy early, the sooner you start the more interest you can accrue over the years.
Start today, think about a strategy and position your child to take control of his/her financial future.
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