A Five Step to Plan for Your Children’s Financially Security.
When I told you about my Mother the Entrepreneur in reply to the question, “What made you who you are?” I had no idea that it would create a flurry of interest in teaching your own children about money management, goal setting & staying focused.
So, I put the following questions out to you:
What kind of impression have you made on your children when it comes to managing money?
What are you doing to help your children set goals, work towards them and to stay focused on those goals?
I wanted the questions to make you think, tickle and titillate you…and did they ever.
Then you called, emailed and stopped me at the grocery store. You said to me, “Tell me what to do to help my children manage money successfully!” So, here is my advice to you.
The best way to help you in teaching your children is to tell you how I taught my children.
I taught my children to follow these five basics steps to financial planning using their life experiences at the time, and when they got older I told them apply these same plans. Now, I’m going to share these personal financial planning steps with you and your children.
Step one: Assess Where You Are Financially
Assess where you are financially, always know how much you own and how much you owe. Subtracting what you owe from what you own will determine your Net Worth.
Step two: Determine Where You Want To Be Financially
Set specific, measurable short term, medium term and long term goals.
Determine what age you want to be financially independent.
Be sure your savings are diversified. Invest in some savings, some bonds, and some mutual funds.
Work to achieve the goals and watch your spending.
Step three: Design a Plan to Reach Your Goals
Create a plan for emergencies.
Keep credit at a minimum.
Buy only what you can pay off every month.
Start investing or continue to invest according to your risk tolerance.
Set up a retirement plan and contribute to it monthly.
Set up a vacation savings account.
Step four: Implement the Plan Start tracking your income and expenses using a spending form or spreadsheet.
Talk to a Financial Advisor at your bank; choose one you feel comfortable with.
Step five: Monitor the Plan
Use your spending plan to track your progress on your goals monthly or at least quarterly.
Update your Net worth Statement at least quarterly, but preferably monthly.
Make adjustments in spending as necessary if you are deviating from your plan.
The time I spent with my children talking about money and the benefits of having money to do the things in our everyday life has paid off. All my children have done exceedingly well financially and they are still continuing on the plans they set so long ago. We still discuss their plans with them once a year and make the necessary changes based on their new goals.
Teaching children about money is different in every family, as different as every child is in each family. The most important thing is not to keep family finances away from children. They need to know what the family is going through. After all, they are part of the family unit.
Academic qualifications are important and so is financial education. Without proper financial education how will our children ever gain the tools to manage their money successfully? The best time to start preparing your children is now. Financial education is not part of the curriculum in our schools, so this job is the responsibility of us, the parents.
<em>If we talk about literacy, we have to talk about how to enhance our children’s mastery over the tools needed to live intelligent, creative, and involved lives.
Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com