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Thursday, February 12, 2009

Creating Wealth for our Children

One of the most important things we can do as a parent is to teach our children about money and wealth. Most of us teach our children ABCs and 123s. We try to teach our children the difference between right and wrong and how to be responsible adults. However, we forget about money and wealth. We forget to teach them how to handle money and more importantly grow their money so that they will have a more secure future.

It was that case with me. My parents never taught me about money. Oh I guess they taught me about the importance of money. They taught me that money should not be wasted. Perhaps they even taught me how to save money. But they never taught me one important thing. How to achieve financial success.

When I was a young working adult, I decided that I could afford to buy an apartment and so I did. I bought a modest apartment in a convenient part of town with shops and transport within easy access. I had saved enough money to pay a downpayment but thats it. That was the extent of my financial knowledge. I paid the downpayment, took up a loan from the bank and started paying. I didn't understand about interests and how it would affect my loan. I just worked hard and paid my loan each month. And after a few years, I owed the bank even more than what I borrowed!

It wasn't until I met my husband, that he taught me to pay off my loan so that I can reduce my debts and work towards investing and growing my money instead of using my money to pay off debts.

Having experienced this myself, I was happy to find a book that talks about how to help our children achieve financial success in life. I won't go into too much detail on the book and spoil it for you but in short, I find the book a good starting point for me personally to understand about financial issues and how to master money.

It teaches me as a parent to first understand finance before teaching my child about financial responsibility and how to create wealth. It teaches me how to teach my children about money and wealth at various ages starting from as young as 2 to 20 and beyond. Many young people today live their life on credit. We must teach our children how not to do this and in order to do this we must start teaching them early. There are some money games outlined in the book to play with your child.

The picture above is savings boxes for my girl and my boy. The book tells me that the way to teach my kids about wealth is to show them where that money can be put or invested and show them how it grows instead of allowing them to save and remove it to buy toys. Oops! I never thought of that before I read this book.

This book also teaches me how to invest for my child early and how my child's funds should be invested. Investing for my child not only means keeping money aside for the further education. It is for education and beyond. It is investing so that they will have a substantial amount of wealth by the time he or she graduates college. It talks about investing with your younger child, investing with your older child and the dangers of your child having money.

Lastly it talks about wills, insurance and trusts. Afterall, we must put our own financial house in order so that our children will not be negatively impacted in future from our own financial problems. And there is a nice little section in the end giving 14 simple rules of wealth.

All in all, I find the book an easy read with short little chapters. I can't take more in my busy day! I think Creating Wealth for our Children is one of the most important things we can do for our kids. If you don't know how, you can start by reading this book: Wealthy Child.


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