I often get this question from people who say how do I build wealth that can transcend my existence. One that my children can benefit from even when I am not there.
Here are a few tips i normally share. Feel free to share more tips you may have with me also. Remember we are all in this journey of wealth creation together.
- Get rid of impulse buying and spending
If you are an impulse spender, you are definitely not alone in this one. I have been a victim of impulse spending as well.
I am not sure anyone can really avoid impulse buying and spending. I think, if you’re able to generate more streams of income and create value in the marketplace, then you can consume whatever it is that you like. The problem however is that you buy and spend on impulse with money you don’t have. I have heard people who use credit cards and loans to buy on impulse. That is the most ridiculous action to take and if you are consistently doing that, your wealth creation goal will suffer greatly.
My candid advice is; first create, then consume.
However, rather than trying to curb your impulse spending, what I would first look at is to try and increase your ability to create value for the marketplace that will generate several streams of income.
If you learn to create value in the marketplace, then you’re able to consume whatever it is that you like.
- Control your spending.
Track your spending every month or every week depending on how your earnings come. If you are unable to manage your spending, then it will not matter how much you earn. Evaluate the percentage of your income that goes into assets or liabilities. It will likely be an eye-opener to see where your money actually goes to.
- Teach your children how to be financially responsible.
Don’t assume that your children will catch up on financial responsibilities when they become adults. If you are really keen on building generational wealth, then you need to remember this is not just about you. Even if you save and do everything right financially, your children may end up squandering everything. There is a popular Yoruba adage: Ọmọ tí a kò kọ́ ni yóò gbé ilé tí a kọ́ tà (the child that is not taught will eventually sell the house that is built)…. also means that the child that you did not train will eventually sell off your investment.
Teach your children where money comes from. Teach them the principles of spending, saving, giving and investing. Stop telling them you got it covered. Let them know when you don’t have money, it is not a sign of failure or weakness.
- Get them a piggy bank or kolo as it is called in Yoruba. Let them put away every single dime they get as gifts, in their piggy bank. At the end of 3 months or 6 months, let them see how much they have been able to put together by themselves. This does not only give them a feeling of excitement, they also learn responsibility, delayed gratifications, and a feeling of achievement. Imagine a child learning all of this, just by saving money in a piggy bank.
- Be their example.
Remember children learn more from watching you. If you are a bad spender your children will most likely gravitate towards that kind of lifestyle. Show them that the things they have cost money. You will be surprised that your children think that money falls from heaven. Take them to the store and let them pay for an item or two from their own money. Not the money you gave them, let them pay from the money they saved or the money they were gifted.
- Teach them how to curb impulse spending. Children naturally know how to capitalize on impulse buying, especially when it’s not their own money. The moment you tell them to buy with their own money, they don’t want to talk about it anymore.
- Stress the significance of giving.
Once they start saving or making a little money, be sure to teach them about giving. They can pick a charity or even someone they know who needs a little help. They can join charity organizations and also volunteer their time and donate their money and old clothes.
- Open a bank account for them.
Banks have kiddies account and most of these bank accounts have additional benefits like scholarship opportunities. Open one for your kid and let him or her operate it under your supervision. This takes money management to the next level, and will prepare them to be able to manage more money when they get older.
- Teach your child how to save for every milestone in their lives.
Birthday, college, buying a car, and all. You may end up adding some of your money to help them meet that need but ensure they contribute a portion as well. It gives them a sense of financial responsibility.
- Encourage them to get summer or holiday jobs.
Growing up we never missed holiday jobs. My parents ensured we never wasted our holidays. Don’t just carry the entire family on vacation and on a spending spree because you can afford it. Let your teenagers work with an organization, they can intern and earn stipends.
- Teach them the danger of debts and credit cards.
I hear some parents simply hand over their credit cards to their kids to spend from. What you have just done is to create future chaos in the life of that child. Let them know that debt is a bad idea, especially when you don’t have the means to pay it back.
- Buy them a budget calculator and teach them how to stick to it.
They should learn the importance of making a plan for their money while they’re still under your roof.
If you are really interested in building generational wealth, then you must start with your children.