Ever heard of the term “boomerang kids”?
Unfortunately, it’s become part of common discussions around grown kids who leave for college or their first job, only to come home (or “boomerang” home) when they’re flat-out broke as an adult.
In fact, only about a quarter (24%) of young adults are financially independent from their parents by age 22. And don’t even get me started with student loan debt! The total of U.S. student debt increased by 107% in the past 10 years.
And it’s only getting worse.
Most kids don’t know how to handle money when they get to college or enter the workforce.
Why? Well, do you remember taking “Personal Finance 101” in high school or college? I don’t. Because it doesn’t exist!
Kids and young adults are expected to make some of the most financially demanding decisions they will ever make — and they don’t even know how to fill out a tax return.
This is a scary problem — but there are solutions.
You CAN teach your kid effective money management before they leave the house so they will be prepared to face those financial challenges that come their way.
Ready to help your child grow into a financially independent adult and almost guarantee their financial freedom? Let’s go!
Here are 8 tips to help your child build the habits of financially successful adults:
8 Tips To Help Your Child Achieve Financial Freedom As Adults
1. Allow Your Kid To Learn On Their Own
As a parent, you want to give your kid everything, especially when it’s something that will help them find financial success in the future.
But even though it may feel like it goes against that instinct, teaching them a few important principles and then taking a step back to allow them to learn on their own is one of the best ways to set up your child or children for financial freedom.
What do I mean by that??
Well, think of it this way…
When your child starts learning how to drive, they’re going to have to know more than just how to push the pedals and shift from park to reverse before you let them loose on the streets, right? Unless they have the chance to get behind the wheel (with you on the passenger side of course), they will never get enough experience to be safe on the road.
The same concept applies to money and finances.
Your child needs experience with money before they can be thrown into the unforgiving world of adulthood. True or true?!
Unless you want their first financial “driving” experience to be on the freeway of piling student loans and credit card debt, let them take the wheel early on in safer situations with you by their side to show them the way.
This doesn’t mean you let them control your money. That would be like letting your 15-year-old drive your Lamborghini. But, you can definitely be their guide as they learn to handle financial pressure.
Make money management a fun discussion to have while they’re young and mistakes won’t cost them big time. Practicing with a small amount of money — from their allowance or a part-time job if they’re old enough — can give your child a huge head start in the adult world.
2. Teach Kids The Difference Between Being Rich And Financially Free
Everybody I’ve ever talked to wants to be financially free. I’ve never talked to anybody that doesn’t want that. But what kids must understand is this one major misconception:
You don’t need to be rich in order to be free.
If you set your sights on becoming rich, it is not necessarily true that you’ll become financially free. They’re not the same thing.
Get freedom first, and then being rich becomes the icing on the cake.
It takes a lot less money and therefore less time to focus on your road to financial freedom than it does to focus on becoming rich.
It’s like I’ve said before, “The biggest mistake most people make is equating rich with free.”
Teach your kids that the road to financial freedom is different than the road to riches. In other words, make sure they keep the end game in mind.
They’re not going to grow up and get rich to be free. They need to become free and then enjoy the benefits of being rich.
3. Encourage Your Kid In Their Financial Enterprises
Encouraging your child to make money will be one of the most beneficial things you can do for their future success.
It will help them understand concepts such as marketing and people skills at an early age. This way, they won’t be spending valuable time on lessons they could have learned when they were younger.
Having a job will also teach your child time management as they learn to juggle school, chores, and work without getting behind.
Procrastination is a huge setback to success, so help your kid crush that instinct by teaching them to fill their time with things that will help them get ahead in life.
4. Teach Them How To Save AND Spend Their Hard-Earned Money
Now that your kid has a small income, they have to learn what to do with it.
Great news! My 6 JARS method is a proven success in teaching children the habit of saving money and mindfully spending money for specific purposes.
Once their money is allotted to a certain purpose, give your kid the chance to spend that money. It won’t help them learn financial responsibility if it just sits on a shelf.
You may be asking, “But Harv, why do I need to teach them how to spend money? That’s pretty self-explanatory.”
Sure, spending money is easy, but spending it right takes a little more practice.
Sometimes, it’s easy to categorize wants in the “Needs” jar, or to spend a little bit more than you can afford just because you weren’t planning ahead.
A budget will help you avoid this, and if it helps you, it will help your kid.
You can let them pay for their own clothes, or give them a chance to buy some of the extra things they would like to have. What they’re in charge of buying doesn’t matter.
The point is that they learn to plan ahead so they will have enough money to buy the things they need.
When they make a habit of effective saving and positive spending early in life, your kid will be able to jump-start their finances as an adult.
5. Teach Your Child How To Invest
Savings are essential to financial freedom, but unless you invest some of your savings, you aren’t taking full advantage of their potential.
Show your kid your portfolio and, even better, help them find some good investments of their own. It’s never too early to start investing.
Remember, when you start investing, it can make a huge difference in how much you make, so help your kid start a portfolio of their own.
Don’t worry about them only having a small income. You don’t need a lot of money to start investing.
As you help them find investment options, make sure they understand that the stock market isn’t the only place to invest. Even though that’s what you learn about in high school economics, there are plenty of other ways to earn a passive income.
Here’s a great infographic that will help come up with great ideas to make passive income.
Once you help them get started, let them keep track of their own investments. Be there to give advice, but just like with the car, let them take the wheel.
This will help them gain confidence in growing their money, and it will also give them a healthy start to their savings account for when they leave the house.
6. Don’t Let Your Kid Borrow Money
Debt is a habit that can be pretty impossible to break once you’ve become accustomed to it. And guess what? Letting your child borrow from you or their friends will just teach them to rely on loans, which will then lead to more and more debt. True or true?
The home is an especially bad place to form a habit of borrowing because you, as a parent, are more forgiving than a business. You may give your child extra time to make payments, and you probably won’t charge interest.
Your child will learn that debt is safe only to be slapped in the face with the cold, hard truth when they grow up; debt doesn’t give freedom, it takes it away.
But even if you would have strict due dates for payments or charge 11% interest, you still want to teach your kid to avoid debt.
Bad habits are hard to break, and successful money management requires good spending habits.
So, don’t let your kid go for that instant gratification trap! Teach them the difference between needs and wants and help them see that saving beforehand is far more satisfying than repaying afterward.
7. Teach Them The Importance of Budgeting “Needs” Vs. “Wants”
This is a major issue if you want your kid to have financial freedom.
Even if your kid counters with, “But wait, it’s my money. Why can’t I spend it on whatever I want?” don’t give in. Eventually, bad spending habits can land your kid in crushing debt or leave them with nothing.
How do they learn good spending habits? With a budget! Your kids HAVE to know how to budget if they’re going to make lots of money. True or true?
When my son, Jesse Eker, started at Arizona State, he couldn’t work in the US, so I was still supporting him. BUT that didn’t let him off the hook for tracking his expenses and staying within a budget.
He submitted a budget report to me each semester, I gave him some tips and suggestions, and he would constantly review and update his plan so he could stay on top of his expenses.
So, what did he learn from this? Two main things:
- He learned the power of effective budgeting and,
- It’s much easier to manage your money when you have a plan.
Part of having a budget is keeping track of everything that you buy so you can review your spending and see if you need to make any changes. Jesse learned to keep track of his expenses so he could forecast what he would be spending and decide what was a “want” versus a “need.”
Becoming a millionaire takes focus, so you might as well teach your child how to focus now!
Teach your child how to stay focused and the importance of staying within their budget to successfully grow their net worth as they practice saving, investing, and smart spending.
How can you help encourage them?
First, you can ask them if they have the money to buy that toy or that game.
If they do, ask them if buying that thing will keep them from buying other things that they may want or need more.
Do they really want it that badly?
Well, maybe they do, and that’s valid, but help them think about it first.
People find money to buy what they want, but often they buy it only to realize that it isn’t as fulfilling as they thought it would be.
When they take time to think before they buy, your kid can decide whether they really want something or not before they spend their hard-earned cash on it. Plus, they’re more likely to make a good choice and stay within their budget.
8. Help Them Have A Positive Mindset Towards Money
Mindset is everything.
When your kid sees money as something they have control over rather than something that controls them, they are ready to take an active part in shaping their future success.
Of course, your kid is going to learn from watching you, so the best thing you can do for them is to have a positive relationship with money yourself.
Help them understand that lack of money is not a restriction, it is an opportunity to grow; to take their future into their own hands and build something amazing. Rich people believe in themselves, and they know they will succeed.
When people are determined to succeed, even rock bottom isn’t too far away from the stars.
As I always say,
Mastering your mind is the most powerful thing you can do to steer yourself down the road to success!
Help your kid find the mindset that all successful multi-millionaires have; becoming successful takes effort, so don’t give up.
These 8 tips are pretty simple, but they will have a big impact.
These 8 tips are pretty simple, but they will have a big impact.Imagine how different our lives would have been if we had known all of this when we were kids?!
Would you be financially free if you’re not already? If you were financially free, how much easier would it have been to get to where you are today?
Implementing these tips and principles will not only help your child overcome many of the struggles and difficulties you had on your financial journey, but it will almost guarantee that they will be successful adults.
As your child experiences small-scale success, they will be motivated to strive for future, larger-scale success, and as we know, motivation makes a millionaire out of anyone.
So, start today and give your child the gift of these simple principles that will pave the way for their financial freedom.
Want to discover exactly how I and thousands of others trained by me became financially free, and how you can become free and teach your children to become free, too?
Then attend my FREE video training called:
The Fastrack To Freedom:
“8 Critical Elements To Becoming Financially Free Quickly”
In this web class, you’ll learn:
- My new FreedomFirst formula, so you never “have” to work again
- The ugly truth about why most people don’t become free, and how to beat the odds with a simple mindset shift
- A unique technique that could accelerate your path to freedom (You’ll be shocked at how simple it is!)…
And much, much more!
Click here to watch your FREE training. See you there!
For your freedom,
P.S. What kinds of things have you done to encourage good money habits in your kids? Leave us a comment and let us know. We’d love to hear from you!
