World-Class Mentors for your Child
One of the many strengths of homeschooling is the ability to resource
mentors during your child's educational experience. Homeschool.com
would like to introduce you to some very inspirational financial
mentors for your children.
The mentors are, Robert & Kim Kiyosaki, Sharon Lechter and Diane
Kennedy, all self-made millionaires. Robert and Sharon are co-authors
of the best selling "Rich Dad: Poor Dad" series. Kim Kiyosaki is one of
the co-founders of Cash Flow Technologies and is a passionate advocate
for educating women about money. Diane Kennedy is a specialized
accountant. Here are some practical insights into how the rich handle
their money and some of the ways they pass their good money skills on
to their children:
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Robert |
Sharon Lechter |
Kim Kiyosaki |
Diane Kennedy |
1) MONEY IS JUST AN IDEA
Robert
Kiyosaki believes that ideas create wealth. "The single most powerful
asset we all have is our mind. If it is trained well it can create
enormous wealth in what seems to be an instant."
Encourage your child's
creative ideas. Help them to explore them, define them, and when
appropriate, develop a plan of action to make their ideas come alive.
2) ATTRACTING MONEY
Robert,
Like Napoleon Hill, author of "Think and Grow Rich," believes that what
you think about is what you become. He believes in the law of
attraction. Which means, if you are thinking you do not have enough
money, then "not enough" is just what you'll attract. If you want to
attract more dollars into your life then you have to become friends
with money. You have to feel good about money, and one of the best ways
to attract MORE into your life, is to feel good about what you already
have.
3) FEEL GRATEFUL FOR WHAT YOU ALREADY HAVE
People
often tell themselves that if they only had more money, or a bigger
house, or a better car, everything would be ok. But these mentors ask
"If you're not happy with what you have NOW, how can you be sure you
will be happy with what you have LATER?" They suggest that you practice
noticing how rich you are right now and how lucky you are to be able to
spend so much time with your children. Take your focus off of what you
DON'T have and think about what you DO have.
4) SET FINANCIAL GOALS WITH YOUR CHILDREN
According
to Sharon Lechter, "By setting financial goals with your children and
helping them determine a financial plan to achieve those goals, you
instill the formula for success. The self-esteem that is built when
they achieve those goals is priceless. Teach your children to say, "How
can I?" instead of "I can't." For example, if your child wants a new
bike, help him/her develop a plan to think of ways to earn money. Help
assess your child's progress along the way and make adjustments to the
goal as needed. Then, have your child purchase the bike as his/her
ultimate reward for completion of the plan.
5) TEACH YOUR CHILDREN TO USE CREDIT CARDS WISELY
Make
sure your children know how to use a credit card BEFORE they leave
home! According to Sharon Lechter, "children are bombarded with 'just
charge it' messages every day. Parents need to complete the picture for
their children by exposing them to the other side of credit. Have them
pay the bills with you, explain the multiplying impact of the interest
charged on the balance due." As Diane Kennedy puts it, "If you went
into a store to buy an item, would you naturally go to the bin marked
PRICES INCREASED 20%!? Of course not, but that is what the consumer
does when they buy on time with a credit card." These mentors also
remind us that credit cards can help make money. Diane uses an airline
credit card to earn free trips, and Sharon uses her credit card to make
her accounting easier. The trick, they say, is to make sure you pay off
the balance each month.
6) ALLOWANCES: TO GIVE OR NOT TO GIVE
Sharon
Lechter believes that if you give your children an allowance, it is
vitally important how the allowance is set up. "Will the children view
the allowance as an 'entitlement' or as earned compensation for
completion of agreed upon tasks or responsibilities? For instance,
consider the difference between these two statements, 'John, since you
are 12 now, you are old enough for an allowance. Every Friday I will
give you an allowance of $10 to spend however you would like.' Or,
'John, you are busy with your homework and sports activities every
night and we want to acknowledge your efforts and encourage you. While
you are busy with these activities, we will give you an allowance of
$10 per week for spending money.'"
Robert Kiyosaki
believes that if you give a child an allowance, you are training them
to be an employee and if you pay them for jobs, you are training them
to be self-employed. He further believes that the best financial
training you can give your child is to help them develop their
entrepreneurial spirit.
Diane Kennedy, relates from her accounting experience that many of the
nation's wealthy legitimately employ their children (ages 8 and up) and
pay them a tax deductible salary. Diane's father taught her to do the
bookkeeping for his numerous businesses when she was 12 years old. This
became a tremendous advantage for her later in her life. She learned
very quickly how to read and understand financial statements. She used
her knowledge to buy her first home when she was 20 and her second (an
investment) when she was 22.
7) TEACH YOUR CHILDREN THE POWER OF PASSIVE INCOME
"What
you do from 9-5 is your job. What you do with your paycheck is your
business." This is the heart of Robert Kiyosaki's Rich Dad: Poor Dad
philosophy. The earlier your children understand the difference between
working for others and working for themselves, the better chance for
financial success they will have.
Homeschool.com
recommends the board game "Cash Flow for Kids" (see reference below)
because it shows children that they can either spend all their money on
doo-dads (things they think must have!) or they can use their money to
bring in more money. Passive income is money that comes to you without
you physically having to go to work for it. Examples of passive income
include royalties on books or songs you've written, rental income from
apartments you own, or interest payments you receive from money you
have loaned to others. The goal of "Cash Flow For Kids" is to become
financially free. The winner is considered "free" when their passive
income is more than their expenses. Imagine what your children could
accomplish in real life if they were financially free. They might
become actors, artists or writers, without starving. They could follow
their passions in life instead of working at a job they hate just to
make ends meet.
8) THE THREE LITTLE PIGGY-BANKS
These
financial mentors suggest using a three-piggy-bank approach with
children. One bank is for giving, one is for savings and one is for
spending.
GIVING
When
your child has some money, automatically put 10% into the giving bank
and then divide the rest into the savings and spending banks. The
benefit of the giving bank is that by giving to others the child is
reminded of how fortunate they are.
SAVINGS
Next,
"match" the amount your child puts into the savings bank since this
will increase their savings more quickly and reward their efforts. When
your child's savings bank gets large enough, you can transfer it to a
real bank account where your child can see the power of interest
payments. When this account gets even larger, you might again "match"
your child's funds and help them invest in a small piece of property or
perhaps some child-friendly stocks
SPENDING
Don't
underestimate the benefits of the spending bank. After all, how can a
child understand "worth" if they don't have the freedom to make a few
bad purchases?
Ensuring that your child has strong
financial skills is critical to his/her future success. The advice from
the mentors in this newsletter will help you start your child on the
right path, however the first step of developing strong financial
skills is developing strong math skills. Without strong math skills,
how will your child read a profit and loss statement, know how to
calculate interest, balance a monthly budget or know when someone could
be cheating them? Strong math skills go hand in hand with financial
intelligence.
Our sponsor APlusStudent.com
has fresh and original math activities that make learning math fun and
will help your child build strong math skills.
Check out their innovative program at:
http://www.APlusStudent.com/
Recommended
Reading
Rich Dad's Rich Kid, Smart Kid: Giving Your Child a Financial Head
Start
by Robert T. Kiyosaki and Sharon Lechter
Robert Kiyosaki's fourth best-selling book is a Homeschool.com
favorite. Robert's book gives parents information to help their
children create a winning formula for success. Robert's personal
stories about his education from both his dads make the book easy and
enjoyable to read. None of the suggestions are hard to incorporate into
a child's academic and financial education. "Rich Kid Smart Kid" is
available for purchase at Amazon.com.
Think and Grow
Rich
by Napoleon Hill
This book changes lives! The editors of Homeschool.com have interviewed
many successful people, including millionaires, and almost all of them
say that this book played a major role in their success. Although
written 60 years ago, the advice in it is timeless. And surprise! The
wisdom contained here is not about money! Available for purchase at Amazon.com.
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do
Not
by Robert Kiyosaki and Sharon Lecher
Children start learning about money at an early age by watching and
listening to their parents. How can parents be good financial role
models to their children when they don't have the skills themselves?
This book is written in simple terms, easily teaching parents how to
build a strong financial future for themselves and their children.
Available for purchase at Amazon.com.
Learn more about the Rich Dad philosophy at: http://www.RichDad.com/
Tax Loopholes of the
Rich
by Diane Kennedy
This book has tips for parents on how they can use their personal
business to reduce taxes. For example, did you know that your home
business could pay your child a salary? (This moves money from your
higher tax bracket to their lower, and perhaps even tax-free bracket).
Did you know that your family business could make pension contributions
to your child? And that you could set up a ROTH IRA account where the
money you put in for your child is never taxed? Diane has lots of great
advice like this on her web site at: http://www.legaltaxloopholes.com/. Available for purchase at
Amazon.com.