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17 Ways To Teach Your Kids To Be Financially Independent

17 Ways To Teach Your Kids To Be Financially Independent

Whether your child is just a toddler, a teenager, or a young adult in college, it’s difficult to even think of teaching your kids about personal finance, especially when sometimes you’re not even sure yourself. The best way to learn is by teaching. So here are the seventeen essential things you must convey to your kids in order to instill the idea of becoming financially independent. Who knows, by teaching these essential things, you might learn a thing or two yourself!

1. Tell them not to depend on a traditional job as the only means of securing the future.

It might be difficult to say this to your kids if this is what you’ve been doing all your life, but times are changing and it’s becoming increasingly clear that we must learn to adapt and find multiple streams of income, and even embrace entrepreneurship. The traditional “one job till retirement” model is not working anymore, so get out of denial fast and let your kids learn about entrepreneurship.

2. Stop telling them that buying a house is the safest form of investing.

This is just not true. There are so many ways to invest your money that are actually safer than buying a house. (Roth IRAs, index funds, lifecycle funds, high yield savings accounts, for example!) Educate yourself about the stock market and these forms of investment if you don’t know already, and prepare your kids to go down the correct path when it comes to investing.

3. Teach them how to save money and pay bills on time by automating their finances.

Experts on personal finance will agree with me on this one, (including one of my favorites, Ramit Sethi of I Will Teach You To Be Rich.) Automating your money and bills is one of the best ways to keep your finances in top shape, earn stellar credit, curb overspending, and–best of all–not stress out about paying bills on time. Automation means you siphon your income into various channels each month (or each week) such as into a high yield savings account, an investment account, a credit card, and finally all your bills. This method forces you to “pay yourself first” by saving and investing, and then pay all your bills on time–leaving you with your true budget amount to spend for other things. If you don’t do this already–start now. Why not learn by teaching your kids about it first?

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4. Remind them of the importance and perks of having good credit, and show them how to do this–the right way.

Most Americans do credit cards the wrong way. The most important way to maintain good credit is to stop paying the minimum every month. Pay your balance back in full at the end of the month. If you can’t do this, it means you are living above your means, and that is no way to live. You can’t get financially independent by living above your means. Teach your kids how to use a credit card the right way, and tell them to think about paying it back in full at the end of the month whenever they want to pull out their credit cards to buy something. Credit cards, if used correctly, offer a tremendous amount of perks such a free flights, insurance, and even fee reductions, but only if your credit is in tip-top shape.

5. Help them set up high yield savings accounts, and a no-fee checking account.

Don’t use the brick and mortar banks anymore. The key here is online banks. The lower overhead of not having physical buildings means that these online banks don’t have ATM fees and overdraft fees, and they certainly don’t charge you for a checking account–even if you don’t have direct deposit! These fees are such a scam. Stop paying useless fees to the banks. You can also start by setting up an online, free checking account for your kids (when it is the right time), and help them set up a high yield savings account online as well, so they can have fun watching their money grow. Contrary to popular belief, money does grow–if you let it. My favorite online checking account is the Charles Schwab Bank High Yield Investor Checking Account, and my favorite high yield savings account is American Express Personal Online Savings Account with a current steady yield of .85%.

6. Show them how to invest in the stock market with diversified life-cycle and index funds, and help them set up a Roth IRA as soon as they’re able to.

What? You don’t know how the stock market works? Well, neither do most experts! If you don’t know how to invest yourself, you should learn. But don’t worry–it’s pretty easy. There is such a thing as automatic investing, and it’s not about picking stocks. It’s all about automatic diversification of stocks. You need to stop being afraid of investing. There are many great resources to learn about this now, so start. Even if you are not doing it, your kids should as soon as they are old enough. There are some very easy and safe ways to invest in the stock market. Life-cycle funds automatically diversify your investments between stocks and bonds based on your age, while index funds offer a bit more customization. It will take one weekend to learn more about all this, and then you can teach your kids.

7. Show them how to live within their means by setting a good example first.

Stop buying things you don’t need and accumulating crap. Kids learn by osmosis. If they see you doing something, they will copy. You need to show them what smart buying is all about. First of all, have a budget and stay within it. Your budget can include calculated indulgences, of course! The point here is: you can’t teach good personal finance if you don’t at least try to practice it yourself.

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8. Encourage them to learn marketable skills with the online resources available, such as coding and web design.

Encouraging your kids to learn useful skills is one of the best ways to secure their financial future. Professions that will be beneficial in the future are not what parents have traditionally thought fruitful, such as studying to become doctors and lawyers. It’s actually more beneficial these days to learn creative skills such as design, art, and computer programming (yes, programming is quite creative.) Creativity is not so easily outsourced. Start with online schools such as skillshare, code academy, skillcrush, and code.org.

9. Open your mind about the possibilities of education–the world is changing and so is the university model.

It may not be 100% beneficial for the next generation of kids to all go to traditional colleges and get formal education. MOOCs (massive open online courses) are changing the way we view traditional education, and so is the abundance of student-loan debt enslaving the whole millennial generation. Your child’s generation doesn’t need to go through this. There are better ways!

10. Encourage the use of social media, but also teach them how to edit themselves online.

Personal branding online these days is essential for creating wealth. Kids are well prepared for this if you teach them how to curate and edit what they say and how they say it. Remind them that their online persona cannot be erased, and they need to avoid embarrassing mistakes. Each person should have a message to the world–help them start developing it. They may only be telling it to their friends now, but in the future it will be to co-workers, clients, bosses, and investors. Teach them how to manage their public image instead of completely discouraging the use of social media. It will be a necessary tool for the development of their careers later in life.

11. Instill the fundamentals of leadership into your child, even if they’re introverted.

Leadership capability is a pretty accurate indicator of success in an individual. Leadership skills include proactivity, responsibility, empathy, creativity, vision, and public speaking skills. Don’t underestimate the importance of teaching these types of skills, even if you believe your child is an introvert. Some of the best and most influential leaders are self-proclaimed introverts. Introversion doesn’t mean they won’t be natural leaders.

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12. Be creative with the allowance system. Don’t shield them from the process of earning and losing money.

Someone once said average people think emotionally about money while rich people think logically–like a puzzle game. Talk to your kids about money–don’t make it a taboo subject. Show them how to think about it logically, and make their allowance and wealth accumulation into a game. For example, create a good incentive: “If you make ten dollars selling lemonade, I will double it or triple it.” Encourage working for money using creativity, so that it is not always associated with exchanging time for money but associated with creativity instead. Help them create something, and sell it. Don’t only teach them to sell, teach them to leverage their skills to create something of value. The lemonade stand lesson is so important. These days, it can also be done online (i.e. set up an online shop, help them create a blog.) Tell them to use their allowance to create more money, instead of spending it all away.

13. Tell them stories about the famous entrepreneurs and game-changers who made a difference.

It is important to plant the seed of inspiration. Growing up with a vision–however small–is what differentiates the ones who make it big from the average ones. If your kids get inspired, they will want to create something of value and importance in the world as well. Kids are idealists of the best kind, with beautiful imaginations of endless possibilities. Don’t block this, enhance it by showing them the world of possibilities, not the world of fear, stability, security, and living only for yourself. Give them something to dream about, and someone to help.

14. Don’t just let your kids consume–let them see the behind-the-scenes, the ‘making of’s, and the budgets behind the movies and games they love.

Your kid loves games and movies? Well, that’s a really good thing! These industries are creative powerhouses. You can use this to your advantage. Kids love to see how things are made, the behind-the-scenes, how things are put together. Capitalize on their love of games and movies by showing them the processes behind how these creative projects get made. Show them documentaries about the sets, the teams, the artwork behind it all. Take them to studios or movie sets, find YouTube videos explaining how their favorite games are made, the technologies behind them, the budgets. Before you know it, they will be interested in the craft behind everything instead of just consuming things mindlessly. This will give them so much more to work with when deciding on what they want to do with their lives.

15. Don’t assume your kid knows what they want, but don’t force them down a career path that you think is right either.

Your kid will probably need time to figure things out. But don’t assume you know best. Encourage their natural talents, interests and habits, and let them know it is OK to make money by doing what they love. This is how every successful person is doing it these days. Don’t judge them by your own measures of what it means to be successful. Take a good look at your own advice and life and see if 20 or 30 years ago you would have taken the same path. Maybe, maybe not. Figure out what their strengths are and help them craft their own path to riches–even if it goes against your fundamental beliefs about making money. The game changers of today’s business world are authentic creatives doing what they love. Don’t let you kids fall behind.

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16. Stop teaching your kid how to survive–teach them how to accumulate wealth.

Don’t teach them to be afraid of accumulating money. Wealth can be used to do good in the world. We need more philanthropists and innovators in our world. There are so many important problems to solve and places to go. If everyone settled into living a safe life with a steady job, there would be no advancement. Don’t forget that safety is only an illusion and no amount of “job security” can keep your kids safe. They have a chance to learn from you now–not the hard way by losing a job or by being in massive debt.

17. Forget the lottery mentality. Show them how to take action toward their dreams.

The road to riches is paved with persistent, accumulated actions. Sometimes even mini-actions. Don’t tell your kids their dreams are too big. Don’t tell them the only way to do that is by winning the lotto. It’s simply not true. Help them take the first steps by having 100% faith in their wildest dreams and showing them ways to start on that path.

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Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

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