Are you planting financial seeds for the next generation?

On this episode of A Wiser Retirement Podcast, Casey Smith, and Missie Beach, CFP®, CDFA®, discuss preparing for the future and how to plant financial seeds for the next generation.

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As human beings, it is sometimes our nature to get caught up in our own daily lives and not pay attention to everything else that might be going on in the world. As a result, we close ourselves up in a bubble and forget about preparation for different circumstances. It is critically important that we teach our children to live today and be happy, but also to prepare for the future. This is one way we can also be planting financial seeds for the future.

Being Rich vs Being Wealthy

63% of American live paycheck to paycheck, including 50% of six figures earners. Through analyzing these statistics, we can understand that a lot of times people just look “rich” because they own lavish things. However, being rich and being wealthy are two very different things. Therefore, we need to help our children understand the value of money.

This task has become increasingly harder over the years as we move away from being a “cash society” to using our credit cards all the time. Consequently, credit cards seem to work just like magic for children. In their minds, it’s a plastic card that allows you to go to restaurants and malls and do pretty much whatever you’d like. With that, there’s the notion that there’s really no effort needed to acquire goods and services.

The Value of Money

When kids are little, you likely focus a lot on teaching them good behavior in general. The same thing needs to be done regarding money. They need to understand that financial success comes from good financial behavior. Moreover, they must know that everything has a value. Parents work hard to acquire the things they have or the things their kids have. In return, they need to teach children that those things don’t just come to them in their sleep. Everything is achieved and acquired with hard-earned money, and it needs to be treated as such. As a result, when kids learn this principle and try it for themselves, they’ll have a greater sense of fulfillment and a better understanding of personal finance.

Act Like No One Today, So You Can Live Like No One Else Tomorrow

Dave Ramsey said, “Act like no one today, so you can live like no one else tomorrow.” We can’t let what other people do influence what we do. We must be conscious of our circumstances and understand that we don’t really know what goes on in other people’s lives. Help your kids understand why you make certain decisions. It all goes back to the difference between wanting and needing. You don’t need the newest, fanciest car when the car you have is paid for and running great.

Establishing a Budget System

There are different services out there now that were designed to help parents institute a budget system for their children and help them manage their own budget. One of them is called Greenlight, a debit card designed for kids. The Greenlight system works like a debit card that’s linked to the parent’s account. They can just deposit money into this card, like a payment of some sort. The kids can have access to their Greenlight account through the app, and that way manage their own finances each month. Different banks also offer similar services that allow parents to monitor purchases and their kids’ budgets. You can choose the service that better fits your family’s needs and your children’s age group.

In conclusion, from a very early age, children learn through modeling. Be a good example, analyze your spending and saving behaviors, and make changes if any are needed. From there, talk to your children about money, make them aware of the family’s financial situation, make plans with them, and budget for the future. Your children will thank you later in life for planting financial seeds for them and teaching them how to live a debt-free life.

Download our eBook on “Top Reasons Most Financial Plans Fail”

TIMESTAMPS:

0:00 Intro

1:18 Being Rich vs Being Wealthy

3:48 The Value of Money

9:45 Act like no one today, so you can live like no one else tomorrow

19:46 Establishing a Budget System

LINKS:

Learn more about Casey Smith, Brad Lyons, CFP®, and Missie Beach CFP®, CDFA®

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Learn more about A Wiser Retirement podcast and access previous episodes.