My parents and grandparents left small financial inheritances to my siblings and me, which we appreciated. But far more precious was the wisdom they imparted beforehand. It was often over the kitchen table or on leisurely walks in the California sunshine that they would talk to me about the value of smart decisions regarding investing, money management and joyful giving. Hard working legal immigrants from Italy, they understood money and gave me a gift of wisdom about it that allowed me to be financially successful and now spend my time in ministry endeavors.
It’s rare for young people to receive any meaningful financial training. Not from their parents, not from their schools, not from anywhere.
After his dad’s passing, Alex was told about the fortune he would inherit. He and his dad had never had a conversation about money. In less than a year Alex had spent the inheritance and had to sell off the high priced items he purchased to make ends meet.
Alex’s father didn’t err in leaving a good inheritance to his son. His failure was in not having imparted wisdom before the passing of wealth. He assumed his values would trickle down automatically, but children today are having a vastly different experience of the world then their parents or grandparents had.
I was a budding entrepreneur of ten when my grandmother noticed I had accumulated a few dollars from mowing lawns and suggested I open a savings account. At first I was a little skeptical, but what really captured my attention is when she explained the concept of compound interest. I imagined how my lawn mowing account would earn so much money that it would soon generate enough interest for me to live on.
I’ve encountered many adults who didn’t have a full grasp on the effects of compound interest and were surprised to learn of its profound power to create wealth. It’s worthwhile to take the time to nail down these basic concepts with your children when they begin earning money as an allowance or small jobs.
It’s not easy to capture the attention of young people. However, I did find a way to do talk to them about financial principles while on a chairlift, or sitting at a boring baseball game, or even a fast food meal. With a little ingenuity you can find a way to give your children or grandchildren a head start on their own financial journeys.
How to help your children or grandchildren grow in wisdom about money:
- Teach them to read the book of Proverbs to learn the fear of the Lord and His wisdom in their lives
- Teach them self-discipline so they will have better control of their spending and saving behavior
- Teach them to seek wise counsel about their money and embrace the wisdom that comes from others
- Teach them to learn from their mistakes or the mistakes of others
- Teach them to pursue excellence and enjoy meeting high standards that are within their reach
This article has been excerpted from Wisdom Before Wealth: Principles of Wealth Creation and Financial Independence for the Next Generation
By Randall Sanada, CFP, CKA
Randall Sanada owns a investment firm and his time is now devoted to ministry endeavors. He was a founding member of Kingdom Advisors with Larry Burkett and Ron Blue.
Order your copy of Wisdom Before Wealth on Amazon.