With university tuitions continuing upward at horrifying rates and participating on sports teams as a teenager demanding more time and resources, parents today are faced with some really tough financial challenges with regards to supporting their kids.
Student loans are compiling as students race for the best jobs. To compete at levels worthy of starting on the high school sports team, private instruction is most often needed along with playing on a traveling team.
It is no surprise parents are feeling the burden.
With parenting comes sacrifices. Yet, how does one support their child’s pursuits without going bankrupt in the process?
PARENT-CHILD FINANCIAL RELATIONSHIPS
In the home loan industry, I’m in constant conversations with clients about parent-child relationships.
Either I’m talking to the child about the gift their parent is set to give them for their next home purchase or talking to the parents about their debts, how they originated, their incredible kids going to outstanding colleges, and the decisions they are having to make about their home, lowering their debt levels.
As I’m in perpetual pursuit of understanding how to guide my clients into the best lifestyle available to them, the topic of parent-child financial relations is of great interest.
DRIVE TO SUPPORT
The innate drive by the parent to support their child.
All want the best for their child.
But most have not gone through the process of making sure the child is raised in an environment that promotes financial independence.
Most have not taken strategic steps to ensure the child isn’t one of entitlement.
RELATIONSHIP TO MONEY AFFECTS LIFESTYLE
Whether rich or poor, the relationship to money, how to create it, how to manage it, and how to distribute it, is all critically important to living out a great lifestyle.
For this reason, I asked my great friend and financial guide, Kristen Koch, at Pivot Independent Financial in Santa Barbara if I could have one of her copies of “Raising Financially Fit Kids” by Joline Godfrey.
Joline one a key reason for Kristen getting into the financial space many years ago. Kristen had long spoken highly of Joline and her work with families raising financially fit children.
Joline is a visionary in this field. Her experience is broad and deep, helping families through workshop along with advising extremely wealthy families with raising financially mature children.
The book is packed with great ways of looking at money, best practices in raising financially fit children, and many charts to encourage the reader to fill in their own life realities.
I’m told an updated version is coming out this summer. Whether you pick up a current copy or wait until the newer version, I’d recommend you follow her lead. (Note: I have no financial interest in this promotion.)
Your depth of understanding in this field will have you and your family one step closer to living the lifestyle you’ve long desired.
Here are my 5 main takeaways that could be of great value to you immediately.
1. MONEY STYLE – Identify your, your spouse, and your child’s money styles. When it comes to money, are you or they a Hoarder, Spendthrift, Scrimper, Giver, Beggar, Hustler, or Oblivious? Knowing oneself and the child enables you to determine the best ways to manage and teach the foundations of money.
2. GODPARENTS OF MONEY – Identify a friend or friends of yours that have shown maturity in handling their own finances. Reach out to them and see if they would be willing to be one of tribe in raising your child with sound financial astuteness. Ask them if they will act as a “godparent” for the child in financial matters, hanging out with them a couple times of year, with money being the main topic. Your child will often listen to them and act upon their guidance at a much deeper level than yours.
3. LIFESTYLE BUDGETING – As we all know, having a budget for ourselves makes a grand difference. Helping your child set up a budget is equally important. Some items will be covered by you. Others will be covered by them or split. Your open communication of this reality is extremely important to your and their well being. Reach out to me if you need help with which categories to include and how to split out the items that you can help your child with and which they should cover on their own.
4. AGE RANGE – The same as reading, the age range of your child plays a role in how you communicate with them about money. Joline does a great job of detailing out how you can communicate money to different age ranges and what the child is ready for with regards to activities and handling money.
5. When a teenager, help your child through these 6 IMPORTANT MONEY SKILLS:
a. Have them demonstrate resourcefulness by cooking a meal for six on a budget of $30. Create birthday presents $5 or less. The goal is to wow the people eating the meal or receiving the gift. You could also have them invite a group of friends to an event and get their ticket covered (line up a group rate where the person inviting the group, your child, gets their ticket for free.)
b. Have them plan a trip. In doing so, have them create a budget, lineup transportation, write out the details, and compose an itinerary and list of resources needed.
c. Help in them in selecting an investment. Allocate $100 to purchase stock. Have them research companies, choose one, then track the stock before and after purchase.
d. Guide them through making a philanthropic contribution. Allocate $100 to donate to a charity or cause. Have them research, report, interview, and plan on how to follow impact over time, then donate the funds.
e. Encourage them to make a difference. Have them design a project that will have a positive impact on the community. Specify purpose, organize a plan, note resources needed and how will acquire them, and the intended outcomes. Then have them raise money.
f. Help them in executing a business venture. Challenge them to make a sum of money through a business venture. Challenge them into turning $20 into $100.
These are just a few of the many ways you can raise “financially fit kids.” What are your best practices? Please share them below so all can benefit.