One of the most powerful gifts we can give ourselves and our children is financial literacy. Understanding how money works gives us the freedom to build our own legacies, in our own way. But because so many of us were never shown the basics of wealth building, we end up living paycheck to paycheck, making it difficult to focus on building generational wealth.
We all deserve a life that is richer than that, as do the generations coming after us.
Building true generational wealth for families can start to grow when we build our financial knowledge and provide the financial education for kids that teaches them how to make money work for them.
This is how we help them, and ourselves, build an abundant future where we can put more of our focus on making a difference in our way, without having to worry about making ends meet.
Why most families never talk about money.
What we have been taught about money and our personal experiences with it shape the way we feel and communicate about it. Depending on where we grew up, the culture we grew up in and the family’s financial situation, money can be an uncomfortable or taboo subject for many people.
This is because:
- Talking about money is viewed as impolite or tacky.
- There can be a fear of judgment tied to money whether you have a lot of it or little of it.
- Debt can lead to emotions of shame or guilt, so people want to hide their financial situation to avoid the way it makes them feel.
- A lack of success with money stops adults from teaching their kids anything about it.
- Money can be tied to feelings of self-worth and a lack of it can make them feel like they are failing, so they avoid conversations about it.
- There are many beliefs that revolve around money being the “root of all evil” and that rich people are greedy or corrupt.
These are some of the reasons there is silence in our families about money. But if we do not talk to our children about it, they too will have to learn by trial and error. And that can keep them stuck in a rat race where they are struggling to keep up month after month.
An abundance mindset for families starts with a conversation and commitment to learning together about building generational wealth. Then you can take the steps to break free from the monthly struggle of making ends meet.
What generational wealth actually means.
Generational wealth is not just about leaving money behind. It encompasses an empowering money mindset, smart money habits and the kind of financial knowledge that expands the possibilities for you, your children and the generations that come after.
Because money means different things to different people, it’s important to learn what building wealth means to you.
Nathan Barkocy and I explore this in our book Old Wealth, New Wealth, True Wealth.
When people focus only on earning money, they can miss out on the things that make life fulfilling, so when they attain the level of wealth they want, they feel empty. True Wealth is not just about the pursuit of accumulating wealth- it’s about who you become in the process.
This is because money in and of itself does not bring fulfillment, but when you align earning money with…
- Purpose-driven success
- Internal fulfillment and satisfaction
- A holistic life approach
- Creating sustainable impact
- Strong relationships
- Emphasis on healthy living habits
…it gives you a way to not only build generational wealth, but to also enable a deep level of generosity and an ability to share your time, money, assets, talents and passions to uplift others.
Wealth that is build on your personal and family values, serving and supporting others and making a difference in the world, has real meaning. And that’s when everyone in your family can feel great about money, as well as the way you make it and the kind of family legacy you build together.
How to talk to kids about money.
Kids are extremely smart and creative. Even the youngest learn quickly. This is why, as soon as a child can tell the difference between a $1 bill and a $20 bill you can start to teach them about money and give them ways to earn it.
To effectively talk to kids about money, you have to meet them where they are with their level of capability and understanding and teach them what they need to know to grow in their financial knowledge. Money conversations with children can be fun as well as educational.
For children:
- Ages 3-5 – Play simple games that teach them how to identify various coins and bills. For example, you could get them to pay for items in your pretend store or restaurant which starts to teach them how money works, as well as the different monetary denominations.
- Ages 5-10 – Start teaching them how to be financially responsible by learning the difference between things they need and want, how to save money and how they can explore ways they can make money inside or outside of your home. You might be surprised at the fun and creative ideas they come up with to build wealth! Give them a budget for a friend or family member’s birthday gift or a meal and allow them to make decisions about how they allocate those funds.
- Ages 11-13 – Tweens are at an age where they are learning more about the bigger world around them, which makes it the perfect time to teach them about creating a spending plan, goal setting, the value of making money and how it can help them make their impact in the world. A fun way to do that together is through ThriveTime for Teens. It is a game where they will be faced with money and life decisions like buying cars, managing expenses, giving back to their community, paying for college, using credit cards, buying stocks and starting businesses. The winner is the teen that not only generates income and makes positive financial decisions, but also effectively manages their time and does good for those around them.
- Ages 14-18 – Teenagers can learn about more complex money topics like investing basics, compound interest, how credit works, the difference between good and bad debt and what it means to develop their entrepreneurial thinking. A great way to discover the possibilities of entrepreneurship together is with the YOUTHpreneur BIZkit. It teaches you how to start a business at any age, with little or no money, and explore how you can give back to your community too. This helps your teens learn how to build wealth and a legacy that has real impact.
- Ages 18+ – Young adults are at the perfect age to learn about legacy and wealth building, ways to develop an abundance mindset, taxes and how to reduce taxable income, long-term financial planning and what they can do to build multiple streams of income so they don’t have to trade time for money. At this stage in their lives, it is the perfect time to introduce them to a financial planner or a proven money mentor who can help them set and achieve their financial goals far faster than they could on their own.
The earlier we teach our children about money and how to build generational wealth, the sooner they can start doing it, which will set them up for the kind of abundant future that we want for them, while they make their impact on the world.
To get going on building your family’s generational wealth, start with a simple conversation and a commitment to learn and grow together while you build your financial and generational legacy.
I hope you will have that conversation today!