This post is sponsored by First Alliance Credit Union
Parents dream about their child being wildly successful. Sometimes, it’s in terms of them making a lot of money in their chosen career field and becoming a millionaire.
Of course, not everyone will become a millionaire. However, you can take certain steps to give your child a “millionaire mindset.” While this won’t guarantee your child will become a millionaire, it will give them a massive financial advantage when they become adults.
Teach Your Children Financial Literacy
The first step to helping your child develop a millionaire mindset is to teach the basics of financial literacy. It’s important to know how to properly manage the money you have before you can begin to build it up.
Admittedly, financial literacy encompasses a lot of topics, and it’s understandable if you feel a little intimidated by the prospect of teaching it all to your children. You don’t have to teach your kids everything at once.
When your children are young, for instance, you can start with the basics, like teaching them the different values of coins and dollars. You can even play shop with them and role play exchanging goods for money.
When they’re a little older, start teaching your child about money management by giving them an allowance for chores and teaching them the importance of saving some of their money by not spending all of their money at once. They’ll need a place to keep the money they’re saving, so opening a youth account at First Alliance Credit Union would be a great step. You can also use this opportunity to teach children about earning interest, and they can watch their money grow in their account by using the credit union’s online banking platform or their mobile app.
Once your child is a teenager, introduce them to the concept of borrowing money. Talk to them about loans and credit cards, and help them understand the difference between good debt, which is an investment in your future like a mortgage, and bad debt, like using credit cards for things you don’t need like expensive clothes or electronics. When they get their first job it will be especially important to teach them how to properly manage their paychecks.
The most important millionaire mindset lesson, though, should be that money is a tool used to accomplish a goal instead of being the goal itself.
Help Your Children Manage Money Themselves
Another characteristic of millionaires is that they have a strong independent streak. They aren’t afraid to ask for help when they need it, but they’re comfortable doing things on their own, like starting a company or designing an electric car.
One of the best ways to help your child be more independent is by encouraging them to make their own budget. Millionaires don’t make money by spending frivolously.
An excellent way to help younger kids start to learn how to budget their money at any age is by teaching them the Save, Spend, Share model. If you want to learn how to implement this with your kids join us for Save, Spend, Share: A Virtual Skill-Building Event for Kids (& parents) during the month of April 2021!
As they get older, talk with them about how you’ve created your family budget, including how you determined how much money to put in each category. Show them that increasing the amount one budget category gets means another budget category will get less.
When your child learns how to budget independently, they’ve taken a huge step towards having a millionaire mindset. They’ll be in control of their money, which not only cuts down on impulse spending, but they’ll also start to think about which goals are more important to them. They will also be able to think about the steps they’ll need to take in order to achieve their larger financial goals.
Teach Your Kids Financial Goal Setting
Speaking of financial goals, a millionaire mindset will require your children to be able to create their own. Millionaires throughout history have set lofty goals for themselves and worked towards them. Jeff Bezos wanted Amazon to be an “everything store,” Bill Gates wanted to put a computer on every desktop, and Steve Jobs had this crazy idea about combining a cell phone, a music player, and a web browser into one convenient device.
You can help your kids set their own financial goals by asking them what things they’d like to buy. If their goals are really big, like buying a car or a house, don’t discourage them.
Once your child has listed some goals, you can help them make those goals S.M.A.R.T.—Specific, Measurable, Attainable, Realistic, and Time-bound. If your child would like a new video game, for instance, you can help them specify which video game they want to buy (specific), how much it costs and how they’ll keep track of their progress (measurable), how much money they’ll be able to put towards their goal regularly (attainable), whether their computer has the right requirements for the video game (realistic) and help them set up a target date for when they’d like to achieve their goal (time-bound).
Once your child has made their goals S.M.A.R.T., help them figure out which one they’d like to achieve first. Generally, it’s better to have your child start with a small financial goal, such as those that are in a shorter time frame or a small amount to save for. This will help build their confidence in their ability to achieve the goals they set for themselves before moving on to the larger goals they’ve set, like the ones that will take longer to achieve.
You can use the free S.M.A.R.T goals worksheet from First Alliance Credit Union to help you teach goal setting with your child.
Show Children How to Take Risks
There’s an old saying that says you can’t steal second base and keep your foot on first. In other words, you have to take a risk in order to get ahead. Millionaires take risks all the time, from starting up their own business to investing their money, and building up the confidence to take risks will help your child out later on in life.
The best way to help your child learn how to take a positive risk is to get them to try something new. Encourage them to learn new skills or enroll them in a program like Boy Scouts or Girl Scouts that will teach them new skills. Remember to encourage them and help them to get back on their feet when they fail.
You can also teach children how to take risks financially. A fun and safe way to do this is to open a WINcentive savings account for them. Each month they’ll earn chances to win money, just for saving money, plus more chances to win quarterly and annual prizes too. Even if they don’t win a cash prize, the money saved will still be earning interest in the savings account and helping them reach the financial goals they set for themselves.
Prepare Children for Financial Success With First Alliance Credit Union
When you create a millionaire mindset in your children, you’re not guaranteeing that they’ll become the next Bill Gates. However, you are giving them the tools to manage their money effectively and providing them with a solid foundation of financial literacy that will give them an advantage when they go out on their own.
If you want additional support in teaching your child to have a millionaire mindset, subscribe to the First Alliance Credit Union blog and Good Money Moves podcast. Then, open your child their first savings account at First Alliance Credit Union to receive a free piggy bank (while supplies last) during the month of April 2021.
Make sure to join First Alliance Credit Union and Rochester Mom for Save, Spend, Share: A Virtual Skill-Building Event for Kids (& parents) to celebrate Youth Financial Literacy Month! Plus, if you’re a new or expecting mom, make sure to register for Hello Mama and look for First Alliance Credit Union’s presentation on Budgeting for Baby!