What We Are Teaching Our Kids About Money

Ok, let me ask you a question, do you want to be truly wealthy?

In essence we all do. Looking at the grand scheme of things and not just fancy cars, luxurious homes, and private jets; wealth brings you freedom to do what matters the most to you and ultimately live a stress free life.

If anything, I want to convey this message to my kids early on in life because I do believe it is a great way to live.

Our approach is to talk to our kids about money so that they know it is a normal part of life and that money management is another life lesson they need to know.

Nowadays, the modern definition of getting ahead in life revolves around acquiring the latest and greatest gadget or brand new “anything”. Even though this may be the norm for families with the never ending well of money, it often gets misinterpreted by families who truly are trying to get ahead.

Money Lessons

In our household, money is an open subject. Our little ones are starting to understand the meaning of savings, investing, and spending sparingly. They know what it takes to earn, how to go about saving, and most importantly what happens when money is invested. Frankly, I don’t have to do much except show them their Vanguard statements and they see how their money is working for them, month after month.

We started this blog with the idea to document our journey to financial independence; and ever since, our kids are beginning to understand the benefits of financial independence. If you invest in the stock market or real estate they provide passive income, income which you can live off.

Our goal is to raise the next generation Atanasovis to be happy stewards of money rather than stressed-out like most people. I want to teach our kids to be money smart so they can take care of themselves and more importantly they can take care of others by ways of donating to their favorite charity.

Earning Money

Being a kid is awesome because all you care about is having fun, after all life is all about having fun. So I always find ways for them to earn money while having fun. When our kids were 3 years old they started earning their salary from our business and on top of that they received cash from family during holidays and their birthdays.

At the same time, every time I upload their photo to this blog they earn commission. To promote active lifestyle, I’m planning to start paying them for riding their bikes or joining me on my afternoon runs.

Even though they do not have a bank account, they have an investment Roth IRA account with Vanguard and that is where all their money goes. Every time they get paid, their money is automatically deposited into their investment account and when they come across cash, I make sure 30% of it makes it to the investment account. This gives them the opportunity to spend money and understand that once they spent their money, it is gone forever.

On the other hand, their invested money earns 10% annual interest and monthly compounded interest. All this is available for them to see on their statements and learn the benefit of automatic investment, understand what happens to their money if left alone, and to know exactly how much money they have available to work with.

The idea here is for them to understand they have a limited amount of money to work with and they can’t just ask mom and dad to buy stuff for them all the time. Instead, they need to work to make money to buy things by doing so it teaches them the value of money.

Walk The Walk And Talk The Talk

Our kids watch every move we make, therefore, we try to lead by example.

I often times have discussions with our 6 and 7 year olds about why it is important to live frugally and manage your money wisely so they can set themselves up for a life of financial security and freedom.

My wife and I discuss all small or big purchases openly with our kids and I know that if they see us make money smart decisions, they will be more likely to do the same.

Annual we spend roughly $50,000 to support our lifestyle. This is another example that spending doesn’t need to scale with income. In other words, over the years as our earnings have increased our spending habits have been pretty constant. This shows our kids that we are disciplined enough to be consistent and that we don’t acquire new things just because we make or have more money.

In the “Productivity During Quarantine” post, I talked about the idea of starting a family foundation. I figured, once our basic life needs are met, it is important to give away our surplus to a meaningful charity. And the reason I feel this way is because it is money well spent and it brings me the most reward and satisfaction.

Right now we are making monetary donations to Doctors Without Borders, but that’s not to say our kids have to donate to the same charity. In fact, I want them to pick out a cause that is important to them and have them donate part of their money to it. They love animals so that could be a clue.

I want to promote generosity but more importantly adopt a giving mindset.

The Core Lesson

The core lesson is very simple, money is something you can master and control. The sooner you understand the meaning of this and the sooner you master money management, the more control you will have over your life.

Hard work produces income and my philosophy has evolved around the fact that this is something you generate yourself. If you work smarter and have a solid understanding on managing your money, you are in good shape to generate plenty of income.

When it comes to savings, I like to think of it this way; when is the best time to plant bamboo tree? 5 years ago! When is the next best time to plant bamboo tree? Today!

In essence, if you want to have money now, you should have started saving 5 years ago; and if you want to have money later you better start saving now.

Understated that what you want later may be better than what you want today. That’s why it is critical to save now so you can do what matters the most to you later on.

Spending is totally in your control therefore there are no excuse for you to spend money on a whim. Contemplate on this sentence for a minute and you will see that you have total power over your spending habits and do not let anyone tell you otherwise.

The bottom line is that, life is not all about money, but about hard work, being a good samaritan, and helping others.

Bottom Line

Sometimes the best way to learn about money is through experience. Experience, we as parents are providing for our kids that will last them a lifetime.

Raising money smart kids is an ongoing experiment and I don’t expect our kids to have the same beliefs as I do when it comes to their finances, but I do want them to possess the knowledge and have a solid foundation to make wise money decisions.

I can’t say that either Leslie or I were raised with this knowledge. That is why we have such a desire to pass this on to our kids. The more money is talked about, the more comfortable they will be making wise financial decisions. The need to know the good, the bad, and the ugly about money.