Parents who mentor their kids by teaching them good daily success habits, set their kids up to achieve far more than 95% of their peers and go on to achieve great success in life. In my study of the daily habits of the rich and the poor (Rich Habits Study – Background on Methodology http://richhabits.net/rich-habits-study-background-on-methodology/) I uncovered certain money habit strategies that the wealthy learned from their parents as children:
- Chore Income – Don’t give an allowance. That implies entitlement. Give them money in exchange for doing their chores and explain to them that this is income they earned. Make a list of all of the chores that can be done. The more chores they do, the more income they make. Pay them a bonus when they do chores not on the list. You can expand this Chore Income strategy by paying your kids for certain good behavior, such as reading 30 minutes or more each day, volunteering, limiting TV and Internet use to less than 1 hour a day, getting their homework done by a certain time each day, getting A’s in school, exercising, good etiquette, achieving goals, not eating junk food etc.
- Work For Their Stuff – Parents of kids who grew up to become wealthy and successful, made their kids work for what they wanted. In today’s world, that includes computers, ipads, iphones, designer clothes, computer games etc. Having to work for what you want creates a work ethic and helps your kids understand the value of money. A good age to teach this Rich Habit is age 14 and up; the age when kids can work.
- The Savings Rule – The majority of the wealthy in my study had a habit of saving. Help your kids form good savings habits by taking 50% of money gifts from your child after they receive the gift. Then put this 50% in a savings account for your kids. What the kids do with their 50% is up to them. This teaches them responsible spending because when the money’s gone their on their own.
- 50:50 Budgeting Rule – This rule teaches kids to save for their stuff when they are too young to have a job. When kids reach age 10 parents should start teaching their kids to budget and save for things like iphones, video games, trendy clothes etc. One way to do this is for parents to agree to match whatever their kids save from their Chore Income or their share of their Gifts Savings.
- Evils of Credit Cards – Kids need to learn that credit cards are bad and should only be used for emergencies. The wealthy were taught by their parents that if you have to use credit cards for your ordinary living expenses you’re living beyond your means and you will wind up poor. Age 14 and up is a good age to start indoctrinating kids about the evils of credit cards. Once a month reminders should do the trick.