For most Americans, the month of July conjures up images of fireworks sizzling in the sky, back yard BBQs and the thrilling sound of patriotic songs; “Our country ’tis of thee, sweet land of liberty, of thee I sing.” America was built on a solid foundation of freedom for all, with the additional caveat that all men and women were created equal. At least that seemed to be the original idea.
The word liberty refers to the state of being free from other’s restrictions on how one chooses to live life. If we apply this definition to what we actually have today, we can see that there are millions of Americans who aren’t free at all.
Being truly free generally requires that we have the information and tools necessary to create that freedom. And in order to create that freedom, it’s helpful to have at least a basic understanding of how money works in society and the primary investment principles that are required to become free. In addition, a strong entrepreneurial spirit is almost mandatory these days if you really want freedom in your life.
Learning this critical information currently doesn’t come as a natural right of being born an American, or a Canadian, or a Mexican or a Frenchman, etc. Financial intelligence, for some strange reason, is usually relegated to ‘elective’ status when it is as necessary as reading, writing and arithmetic. And often when it is taught, it’s about budgeting and balancing checkbooks, not investing in passive income producing assets or thinking like a wealthy person. Heaven forbid, we teach kids how to become financially free when they’re young instead of expecting them to spend 40-plus years in a job where they will hopefully ‘accumulate’ enough money to ‘retire’ at some point in their future. What if we teach kids the concept of financial ‘utilization’ instead; using their natural born entrepreneurial talents to create businesses that allow them to live amazing lives while helping others along the way? Gone are the days of a good, stable, secure job; here are the days of creating your own way.
At present, most of America’s youth are not learning about money in school and the vast majority of children never learn about money at home. This is because most parents don’t understand money either and those that do, for whatever reason, don’t talk to their kids about it. The fact that such a small percentage of people actually understand the ‘language of money’ explains why the consumer debt number in America in 2007 reached an astronomical $2.5 trillion dollars, not including real estate mortgages. According to the Federal Reserve, $2,500,000,000,000 represents $8,200 for every man, woman and child that lives in the US.
Something happens when the numbers get this big. There’s a shift in our ability to conceive it as real. It is one thing to owe someone $1000 but quite another when that debt reaches $100,000. The idea of adding another $100 to a $1000 debt causes most people to consider what they are doing. Adding $100 to $100,000 worth of debt often doesn’t raise an eyebrow.
It’s a matter of contrast; the bigger the contrast, the smaller the perceived reality. This is exactly what’s happening when Americans view our national debt: the numbers are SO big that you just can’t wrap your head around them. It’s kind of like thinking about the Universe; our brains short-circuit and shut off.
So what do we do? Well, in my opinion we must start educating our youth about money. I believe the more we educate, the less we must legislate. How do we do this? I have three simple things that, if done, will yield amazing results for our nation’s financial future.
First and foremost, we must set a better example for our youth, from mom and dad all the way up to the highest branches of our government. Children learn first by example and they learn by example in three primary ways: by what they SEE; by what they HEAR; and by what they EXPERIENCE. Bottom line: start watching what you and others are teaching your children about money by what they see you doing with it, what they hear you saying about it and by the experiences your kids are having with it.
Second, talk to your kids about money. Just like sex and drugs, if you don’t talk about it, you have no idea what they are learning, or from whom. We all have to get over the idea that money makes us who we are. Money is simply a tool to reach our dreams, help others and do good in the world. Money doesn’t make you happy, pretty, sexy or cool. Money generally just makes you more of what you already are. If you were greedy when you were poor, chances are you’ll be more greedy if you become rich. If you were generous when you were poor, chances are you’ll be more generous when you’re rich.
How do you bring your kids into the ‘family money conversation?’ Simple… just start talking. Let them help you pay bills online and write checks, balance the checkbook, work on the family budget. Let them tag along when you visit your financial planner. Invite them to work with you or give them a job in your business. Talk to them about your paycheck and taxes, your investments, your debt. Yes, I said your debt. What better way to help them learn about debt than to experience the pain around it. Don’t shelter them. Show them. Let them see that money is just another tool we all have to learn to use wisely. Make learning about money a family affair. Show them what it takes to be an adult who is working towards self-reliance and financial freedom.
Third, give your kids practice with money before they move out and their mistakes cost them dearly. College students are dropping out with huge amounts of debt. Some are even committing suicide over the debt they accumulate. For the most part, teens don’t have the maturity or necessary knowledge to handle their own finances. This includes all the credit card offers they are tempted with, the high cost of living and competing with their peers in terms of clothes, entertainment, vacations, phones and more.
Financial practice must start early and you must have a system. The Ultimate Allowance is one such system. This book is the result of teaching thousands of kids and their parents about money for the past seven years. It shows you, the parent or guardian, how to run the money that you’re spending ON your kids, THROUGH them instead.
Consider this example: If your son or daughter came to you wanting to grow up and become a major league baseball player but you never gave him or her a ball, a glove, a bat, time to practice, a place to practice or heaven forbid, THE RULES, what’s the chances of him or her accomplishing the dream? Slim to none. This is exactly what we’re doing with our children. We MUST start teaching them how to think like, and make decisions like, people who value financial freedom over Piddlycrap.
What’s Piddlycrap? Just look around your house and you’ll see it everywhere. It’s the stuff we waste our valuable financial resources on every day; the stuff that goes down in value instead of up. The stuff you sell at a garage sale for pennies on the dollar. It’s the stuff that takes money out of our pockets instead of putting money into them.
Parents, your number one job is to prepare those beautiful kids of yours to be self-reliant ~ and loving them is not enough. This means you have to:
- set the best example you can;
- talk to them about everything money; and
- give them plenty of practice while they’re young.
Doing these three things will dramatically increase your chances of successfully turning America’s children into resourceful, financially free leaders who will make this country’s economy strong again. And isn’t this what all parents want?
In 2002, I dedicated my life to teaching our youth, and their parents, the basic financial principles I never learned in school or at home. I have taught many different races and cultures, genders and ages and, everywhere I go, I find people want to learn the same thing. They crave the knowledge they need to know how to make informed choices and decisions that will help them create a sense of freedom for themselves.
Isn’t that what this country is all about? Isn’t that where we started; a desire to be free? Isn’t that what Martin Luther King, Jr. was willing to give his life for? Isn’t that what this nation stands for?
Let’s make financial literacy mandatory in our schools and financial intelligence a sought after value. It’s time everyone had access to the information and tools they need to create real freedom in their lives. Join me in this mission, won’t you?