Teach Your Kids Financial Literacy
Financial literacy used to be an uncommon term…before Robert Kiyosaki with his Rich Dad Poor Dad series came along. And indeed, financial literacy is one of the primary things that the author advocated in his series in order for his readers to become rich. Parents might think it’s too late for them to bring about a huge financial change to their life right now, but there’s always the bright side and that’s you – as parents – can at least give your children the gift of financial literacy to help them build a richer future for themselves.
What and How Parents Should Teach Their Children about Financial Literacy Kids nowadays are more inclined to listen to audio books than spend time reading them from page to page. Obviously, you’d have to purchase the audio version of the Rich Dad, Poor Dad series if you wish for your kids to learn about financial literacy. But there’s another way to teach it to them and that’s through regular and open discussions with your kids.
Lesson #1 Why Your Kids Need Financial Literacy Robert Kiyosaki states in his Rich Dad Poor Dad series that most – if not all – schools seemingly purposefully neglect to provide their students with adequate financial education. Academics seemingly believe that the science of making and keeping money is beneath their level, and this unfortunately is one of the biggest reasons why many people end up overworked and drowning not in money but in debt.
In Rich Dad’s Rich Kid, Smart Kid: Giving Your Children a Financial Headstart, a book which he co-wrote with Sharon Lechter, the author enumerated three essential factors of success: a winning academic formula, a winning professional formula, and a winning financial formula. The first two factors are automatically taken care of by schools and parents, but the latter is mostly ignored.
And this is, of course, a very grave mistake in the schools’ and parents’ part. And while you can’t correct the school’s mistakes in an instant, you do have the power to change your outlook and consequently change your child’s future for the better as well.
With financial literacy, your children will learn something more important than making money and that’s keeping it.
Lesson #2 Accounting Formula: Assets and Liabilities If you recall your first bookkeeping lesson, the first equation you’re required to memorize and understand is that ASSETS minus LIABILITIES = EQUITY. Instead of waiting for your kids’ teachers to teach them that, you can initiate their education on the world of finance by emphasizing the difference between assets and liabilities.
Assets, simply put, are things that you own and represent your money. Liabilities are debts and expenses or anything else that reduces your money or anything that you own. No matter how great your assets are if you’ve got great liabilities as well then you’ll still end up with less than nothing.
Emphasize to your kids that they shouldn’t completely focus on building their assets. They should give equal importance to keeping their liabilities to a bare minimum as well. Doing both – and not one or the other – is what will make them rich.
Lesson #3 Every Child is a Genius In his Rich Dad Poor Dad series, Kiyosaki admits that he would’ve easily been a juvenile delinquent if not for his father’s persistence in keeping him in school. The author believes that all parents should be similar to his dad in the sense of playing an active role in their children’s education.
If your kid’s having problems with school, you simply have to work harder to determine in which way your child best prefers to learn. His preferred method might not be to your liking, but if that’s what will allow him to learn and be motivated to learn then just give in gracefully.
While it’s certainly possible for a child to grow rich without education, it’s certainly better and easier if he has the essential academic qualifications.
Lesson #4 Encourage Discussions Lastly, always keep in mind that the topic of money is not a shameful topic to discuss. It is neither crass nor disrespectful to discuss how to earn, make, keep, and spend money. Indeed, what’s more shameful is to neglect providing your children with the financial education he needs from you and allow him to grow financially unintelligent.
To Your Success! Ada
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I am a Learner of Rich Dad' s Book, I will like to share what I have learnt.
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