Wealth Building is Wealth PLANNING!

Your children will learn a lot about money when they finish college and get into the real work world. But I believe that as a parent, your job is to start when they are young, teaching them about money, business and the principles of wealth.

The earlier you start the better. That leads me to a major point I want to make about the “P” word. PLANNING!

It’s not enough to get your kids through school with straight A’s. That’s nice but although their grades are important, most schools are not teaching anything about financial or business planning. We are continually amazed in our wealth coaching programs how little information adults have, let alone their offspring, about the importance and power of PLANNING.

In fact, for the rest of this post, I’m going to put the word PLANNNING in all caps in hopes that you’ll notice how passionate I am about this!

“It doesn’t matter if you’re a wealthy doctor, dentist, or lawyer…”

It doesn’t matter if you’re a wealthy doctor, dentist, or lawyer, your income has little to do with your long-term wealth. Unfortunately, I’ve run into a lot of broke doctors, dentists and lawyers who had plenty of income but way too much outgo. Their lack of PLANNING created an endless cycle of working harder and creating more stress versus working smarter and finding more peace.

Your wealth is a result of your PLANNING not your income. Here are a few things to teach your children about PLANNING (some of this might work for parents as well).

1.       LIVE like this is your last day on earth but PLAN like you’re going to live forever. In other words, enjoy this moment, let go of worry and be present to the joys of life all around you. And of course, that’s much easier to do when you’re PLANNING process gets those little worries out of your head and onto paper.

It’s easier to relax about money when you’ve automated your savings, you pay yourself first, your investing takes place automatically, the important things are insured and you have a clear understanding of where your money is going. This is part of the “First things first” philosophy that allows us to enjoy the day because our minds aren’t cluttered with unfinished business.

2.       Teach the positive and negative power of interest. We love earning interest and we hate paying it. Watch your child’s horror when you teach her that that brand new $30,000 car will really cost her $40,000 if she finances it. Watch her amazement when you show her the power of compounding interest. Show her how quickly she will double her money by teaching her the simple formula of the rule of 72. Divide 72 by the interest rate being earned on the investment to determine the number of years the investment will need to grow in order to double in value.

For example, if she’s making eight percent on her mutual fund you set up for her, then the $2000 she makes over the summer working at McDonald’s turns into $4000 in nine years. Now that might seem like an eternity to a teenager but putting this on paper in front of your children now is a powerful motivator for teaching them the power of PLANNING!

3.       Model the concept of Delayed Gratification. Teaching your children how a “cooling off period” before making a major purchase is in itself, a money maker! Teaching your child how to be aware of their purchasing process will save them from a lot of financial stress in the future.

Teach them to practice wealth building skills such as  – Research, Negotiation, and Saying No. Teach your children that the marketing campaigns bombarding them every minute of every day are based on hard core research. Big business has studied all the ways to play on the emotions of fear, greed and vanity to get us to buy things we don’t really need.

4.       Start PLANNING today! Keep it simple. Sit with your kids and write down three things they want to have, do or know in the coming year. That’s a plan! Now, tie in the financial components and you’ve got a good start on some highly beneficial long-term PLANNING!

I’m not saying that any of this is easy to teach or to practice but at the same time, they’re not really that hard! It doesn’t really matter if you have kids or not, these principles are powerful PLANNING principles that any of us can start using today!

And by the way, when you’re ready to start developing a solid long-term wealth plan for YOUR life, give me a call.

Have a prosperous day!

Gabby Huguenin