Wisdom of Rich Dad

When your children are little, you purchase things for them that they may need or want. Once they hit the teenage years, that’s a different story. As the parent of a teenager, you need to have a plan for teaching teens to save money. When you child hits the teenage years the things they want seem to increase and so does the price. They still seem to think you have all the money in the world and you can and should buy them whatever they want.

Once they hit 16, they should get a job. But it can start earlier than that if you want it to. They can mow lawns, shovel sidewalks, or babysit. Working hard and making money will teach them the value of a dollar. Once they start making money they will probably want to spend quickly too. Teaching teens to save money may be difficult at first, but you need to do it.

Teaching teens to save money is important for their future. They need to know why they should save and how to do it. You may need to learn yourself so you can teach your teens to save money, but it will be a valuable lesson for you as well. The first thing you need to do is take them to the bank and set up a savings account for them.

Once you do this you need to set them up on a budget. Teaching teens to save money through a budget is one way to make this happen. You need to gather all their bills and their pay checks. Their checks will be different since they are probably not guaranteed the same number of hours each week.

You need to teach your teens the reasons why they need to save money. These reasons can include saving for a car, a special date, new clothes, or college. Teens want expensive things and when it gets to a point where they have their own money, you should consider making them pay for most of those things.

Teaching teens to save money can be a very difficult thing to do. You need to stand your ground when they try to tell you they have no need to save money. It may be hard for you, but you can do it and you will thank yourself for it in the future.

Your teen will thank you when they have a major repair that is needed on their car, or if they have to buy tires for it, or they find a new pair of shoes they “must” have. They will also be thankful when they are grown, married, and have their own kids and need money to buy their first house.

There are many reasons why teaching teens to save money is so important. Showing them how to save money will not only help them now, but in the future as well. They will be so happy you taught them these things later in life when they have a family and retirement to think about.

After browsing through dozens of potential high-chairs for our six-month old daughter, my husband and I found ourselves at the upscale chain Giggle. “This one’s only $250!” I exclaimed, as I ran my hand over the smooth wood of the sleek model.

My husband looked at me. “Only $250” for a high chair? A few days earlier, we’d talked about a budget of $60 for this purchase. My enthusiasm for the pricier model epitomized a recent trend in my shopping habits: When it comes to my baby, no price tag is too high. I want to get her the best, from teethers designed in Germany to Baby Bjorn potty training stools.

The fact that she goes to daycare helps fuel the flames of my spending sprees. I might not be able to spend all day with her, but I will buy her whatever she wants! $80 Jumperoo? Done. Organic, pureed baby food? Absolutely. And if she might sleep better with the $50 mobile, add that to my diapers.com order, too.

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Almost everywhere you go, you can hear parents say: “I want to start teaching my kids about money while they’re young, so that maybe they’ll grow up and avoid making the same mistakes I did, maybe they’ll be both wealthy and grateful.” It makes sense that teaching kids about money is on almost every parent’s mind.

There are several money gurus for adults (Robert Kiyosaki – “Rich Dad, Poor Dad,” David Ramsey – “Total Money Makeover”, David Bach – “Automatic Millionaire,” to name a few). Of course, most parents with young children who are learning from these gurus eventually get around to wanting to impart this new-found wisdom to their children while they’re still young.

Also, there’s the huge number of conscientious parents who are in debt and who are on a path of getting rid of their debt. And then, there’s the self-aware parents who have become introduced to, and may be continuing on the path of, replacing a poverty-focused mentality with an abundance mentality (e.g. The Secret, Law of Attraction, and various faith-based and secular abundance teachings).

Of course, America is very well-poised to finally leave the poverty mentality of The Great Depression, as the third or fourth generation is being born now. Finally, Americans are extricating themselves, bit by bit, piece by piece, of the deeply embedded beliefs and language of The Great Depression, which are negative and counter-productive to building financial wealth.

Maybe you read “Rich Dad, Poor Dad,” and a light bulb went off about how you look at money, and now you are at a loss of how to teach your children about money. Maybe you don’t yet know how money works or what ROI means, and don’t have the time to go through a long learning curve, but want to capture the opportunity to teach your kids about money now while they’re young.

Here are 7 key points that you must know when teaching your kids about money:

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Rich Dad’s Rich Kid, Smart Kid may be the most helpful book ever for guiding adults on how to assist children and teenagers in learning about how to organize their lives to be more successful. I highly recommend this book to every parent, god parent, grandparent, aunt, uncle, and caring older sibling.

I think this is the best of the Rich Dad, Poor Dad series, and clearly deserves more than five stars.

Think of this book as the instructor’s guide to teaching Rich Dad, Poor Dad combined with a basic guide to helping young people identify their strengths and learning styles. The book also provides a sound foundation for helping young people build their self-confidence in a healthy way.

Unlike the other books in the series, this one draws on the positive lessons of both Mr. Kiyosaki’s Rich Dad and his Poor Dad rather than just the Rich Dad. To overcome Mr. Kiyosaki’s lack of experience as a parent (he has no children), the book relies on important academic and professional research to add context for Mr. Kiyosaki’s observations about his own childhood.

The book begins by citing a recent HEW study that showed that 56 out of 100 people who are 65 need either government or family financial assistance to make ends meet. The book is aimed at providing children with the learning experiences to allow them to avoid that dismal financial result.

Then the perspective shifts to pointing out that the change from an industrial to an information economy has shifted the rules of success in our society. The old rules were to get a good education, get a good job, and have financial security from one employer. The new rules are quite different and feature being in an environment in which one will be a free agent, work in a virtual company, get paid for results, work in many professions, retire early, work only when you are interested in working, learn in seminars rather than classes, focus on your core talents, emphasize developing and implementing new ideas, self-direct your own investments for retirement, and work at home rather than in an office.

Read the rest of this entry »

Almost everywhere you go, you can hear parents say: “I want to start teaching my kids about money while they’re young, so that maybe they’ll grow up and avoid making the same mistakes I did, maybe they’ll be both wealthy and grateful.” It makes sense that teaching kids about money is on almost every parent’s mind.

There are several money gurus for adults (Robert Kiyosaki – “Rich Dad, Poor Dad,” David Ramsey – “Total Money Makeover”, David Bach – “Automatic Millionaire,” to name a few). Of course, most parents with young children who are learning from these gurus eventually get around to wanting to impart this new-found wisdom to their children while they’re still young.

Also, there’s the huge number of conscientious parents who are in debt and who are on a path of getting rid of their debt. And then, there’s the self-aware parents who have become introduced to, and may be continuing on the path of, replacing a poverty-focused mentality with an abundance mentality (e.g. The Secret, Law of Attraction, and various faith-based and secular abundance teachings).

Of course, America is very well-poised to finally leave the poverty mentality of The Great Depression, as the third or fourth generation is being born now. Finally, Americans are extricating themselves, bit by bit, piece by piece, of the deeply embedded beliefs and language of The Great Depression, which are negative and counter-productive to building financial wealth.

Maybe you read “Rich Dad, Poor Dad,” and a light bulb went off about how you look at money, and now you are at a loss of how to teach your children about money. Maybe you don’t yet know how money works or what ROI means, and don’t have the time to go through a long learning curve, but want to capture the opportunity to teach your kids about money now while they’re young.

Here are 7 key points that you must know when teaching your kids about money:

1. Financial Wealth is created when your money makes money (rather than you making money).

2. ROI means Return On Investment. It is your Return On Investment – that is, the money that your invested money makes for you – that defines your wealth (rather than your earnings or your capital gains). For more teaching on this topic, read or listen to “Rich Dad, Poor Dad,” and/or play “Cash Flow 101,” to learn about getting off of the Rat Race.

3. Thinking that you’ll get out of debt and become wealthy when you work harder, get a raise, make more money, have greater commissions, or make some landmark profits in your stock trading account, are just lies that the 20st Century American society has created. Wealthy parents know differently. Wealth is created by ROI, which comes from having your money make more money for you.

4. Giving is part of gaining. When you have Returns On Investments, it’s important to keep the flow of money circulating – by more investments, more spending and more donating (charitable giving).

5. Good children’s banks have 4 parts – Investing, Donating, Spending, Long-term Savings (to buy Christmas/holiday gifts, birthday gifts, Father’s/Mother’s Day gifts, etc.), and properly take care of money (rather than scrunching up bills and jamming them into a tiny slot). Why 4 parts and not 3? Try dividing up Grandma’s $20 bill birthday gift to little Jimmy by 3.

6. Allowance only works if you have a complete plan to teach wealth habits to your children. Allowance alone, without more, won’t do it. Allowance and chores are a dangerous combination. Gratitude in children doesn’t depend on whether kids have to do chores in order to get an allowance – it depends on a lot of important things, but not that.

7. Children actually ignore you when you start talking to them about money (a.k.a. trying to teach them). Children learn by doing. Children get strong wealth habits by doing the same thing over and over and over – in an interesting and creative way.

If your family’s plan for teaching your children about money is lacking in any of these 7 areas, fear not. There are lots of resources on the web and in bookstores to help you get your children on a good financial wealth path.

Find the one that works for you, with your style and where you’re at in life. Now you’re armed with these 7 essential points to evaluate which tools will be best for you to teach wealth habits to your children, even if you’re not (yet) wealthy.

Theresa A. Markham, Esq. is the author of The Kids’ Bank Book: How to Teach Wise Money Management to Your Children with Fun, Ease, Smiles and Laughter, and offers the Book and other info about raising wealthy kids at www.KidsBankBook.com. She donates 10% of The Kids’ Bank Book net profits to Champ House.

It’s a late weekday afternoon and best-selling author Sharon Lechter is once again giving financial advice.

Today, her target audience is quite different from the adults who purchased the “Rich Dad Poor Dad” books she co-authored with fellow Valley resident Robert Kiyosaki.

This group consists of a half-dozen young teenagers at a Phoenix branch of the Boys & Girls Clubs, and the audience is one Lechter hopes to appeal to with YOUTHpreneur, part of her new business that teaches children how to be entrepreneurs.

“I have a passion for financial literacy for families and children,” said Lechter, who left the Rich Dad Company in 2007 after disagreements with Kiyosaki and now runs Pay Your Family First. “What is happening with today’s kids is they don’t understand delayed gratification. . . . Kids want it before they even think about working for it.”

Lechter’s focus on children comes at a time when national studies show high-school and college students are plunging themselves into deep credit-card debt and having easier access to credit. Meanwhile, President Barack Obama last week threw his support behind a consumer-friendly credit-card law that eliminates tricky fine print, sudden rate increases and late fees.

The YOUTHpreneur program teaches children how to make money through gumball sales, and she’s teamed with local branches of the Boys & Girls Clubs and Fry’s Food Stores. Through the program, children learn about sales and profits by operating a candy machine at a Fry’s store.

“It was a good experience. We learned about business,” said Michael Clark, a 14-year-old from Greenway Middle School in Phoenix. “We had fun doing it, and we made some money for the Boys & Girls Club. So, it was all good.”

Lechter, of Paradise Valley, has taught the YOUTHpreneur program to about 70 children at six different Boys & Girls Clubs branches during the past year, and she’s selling the program on her Web site, youthpreneur.net.

She said working with kids brought her career full circle as the certified public accountant began focusing on financial education when her oldest son, Phillip, went off to college.

She said she thought she had taught her son to manage money, but as a freshman at Arizona State University, he quickly dug himself into a $2,500 credit-card debt.

“I was so upset, but I was more angry at myself than him,” Lechter said. “We didn’t bail him out. It took him about five years to get himself on track.”

The lesson apparently stuck because Phillip Lechter now is president of her new company, and he said the business would focus on entrepreneurship, financial education and money tips for teens and parents.

Sharon Lechter said it’s important for parents to teach their kids about financial management because college students are racking up thousands of dollars of credit-card debt and even some high-school students are using credit cards.

Sallie Mae Inc., which manages student loans, released a study this month that said nearly one-third of college students put tuition on their credit cards and the average balance for a student was $3,173.

College seniors are graduating with an average credit-card debt of $4,100, up from about $2,900 in 2004, according to the study. The median credit-card debt for freshmen nearly tripled to $939 since 2004.

Meanwhile, a 2008 nationwide survey of high-school students by Jump$tart, a financial literacy organization, found that nearly 35 percent of students had a credit card, up slightly from the nearly 32 percent in 2002.

Steve Beekman, area director for the Boys & Girls Clubs of Metropolitan Phoenix, said Lechter provided important skills to the children. He said a donor provided the gumballs and machines, while the children, who were between 11 and 15, donated the few hundred dollars in profits back to the Boys & Girls Clubs.

“It has gotten them exposed on how to run a business, and it has opened their eyes to the real world in how to make money and not go out and spend it all,” Beekman said.

Along with running YOUTHpreneur, Lechter also has co-authored “Three Feet From Gold,” which interviews successful entrepreneurs like the founders of Chick-fil-A restaurant and Mrs. Fields Cookies.

She said the book, a partnership with the Napoleon Hill Foundation, is scheduled to be released in October.