For eight decades, 93-year-old billionaire Warren Buffett has been an inspiration for everyone who wishes to invest and grow their money. The 'Oracle of Omaha''s life teaches so many lessons.?His teachings will continue to live on for generations to come, which is why a peek into his financial life can make you, as a parent, learn a lot, and teach the same to your kids too.?
There are many aspects of Warren Buffett's financial life which can be used as lessons that parents can teach their kids, especially when trying to make them understand the importance of money from an early age.
When Warren Buffett advises you to start teaching financial skills to kids early, he literally means early.?¡°Sometimes parents wait until their kids are in their teens before they start talking about managing money ¡ª when they could be starting when their kids are in preschool."
So, how do you teach financial literacy to a three or five-year-old? Forget the stocks or bonds, and start with the basics such as 'money doesn't grow on trees'.?You can explain to young children that spending isn¡¯t as easy as tapping that card everywhere you go. Make kids understand from early years that it takes hard work to earn money, so you shouldn¡¯t spend it carelessly.
Also Read:?10 Inspirational Quotes From?Warren Buffett
As soon as they¡¯re old enough to understand, start teaching your kids the value of saving.?¡°Saving even a little bit of money on a regular basis pays off,¡± Buffett says. ¡°Instead of spending money on a soda, which you don¡¯t really need, put it in savings, and it will make even more money for you by earning interest.¡±
You can also get your kids their very own savings account and debit card.?As per a?Yahoo Finance report,?some special apps?even let you assign chores, set up automatic deposits for their allowance and even deposit parent-provided interest. They¡¯ll be able to see how much money they¡¯re making and saving ¡ª but don¡¯t worry, you'll have complete control over how much they can spend with the card and where.
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Your kids are going to pick up some of your habits ¡ª the good and the bad. Buffett credits his own father for showing him how to build the right habits.
¡°My dad was my greatest inspiration,¡± Warren Buffett?said, CNBC reported. ¡°He (my dad) was my hero when I was six and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early.¡±
Want to be a hero parent? Inspire your kids by making smart financial decisions. That doesn¡¯t mean you need to be an expert investor, but at least show your kids you know how to keep your house in order.
That means, first of all, eliminating any troublesome debt you¡¯ve accumulated. If you¡¯re struggling with high interest rates ¨C the kind on credit cards, for example ¡ª consider a debt consolidation loan to roll all those debts into one loan with a much lower interest rate.
You can find?free services online?that will help you quickly compare quotes from different lenders, making it easy to find the best rates.
A tough early lesson for kids: You can¡¯t have everything you want.?Before they can manage their money responsibly, you¡¯ll need to teach them that there¡¯s a significant difference between wants and needs.?In an?interview, Warren Buffet suggests having your kids make a list of five or 10 things they¡¯d like to purchase. Then, go through each item with them and mark whether it¡¯s a need or a want?and explain why.
When you do shop for the needs ¡ª or occasionally, the wants ¡ª show your kids they can make meaningful decisions at that stage, too. For example, not every store has the same prices. With a?free browser extension, you can instantly scan for better prices at other sellers.
It didn¡¯t take long for Buffett to start sharpening his business skills.?Long before Berkshire Hathaway happened, six-year-old Warren Buffett earned his first few cents selling sticks of gum in the neighbourhood. Seeing an opportunity for even better margins, he moved on to purchasing six-packs of Coke for a quarter and selling the individual cans for a nickel each.
Your son or daughter may or may not grow up to lead a multinational conglomerate, but encouraging them to see money-making opportunities will help them down the road. Even a lemonade stand will help teach lessons like problem-solving, goal-setting and salesmanship.
You might also consider building up some seed money for your child¡¯s future ventures using an automated investment app. Some apps even collect the leftover change from all the little purchases you make each day and put it?into an investment account for your kid.
Then, when your child grows to become an adult, they'll be able to take over the account and use the lessons you've taught them to grow it even more.?When they're in their teens, you could also consider opening up a joint investment portfolio together.
Also Read:?How A Lost iPhone Led To?Warren Buffett?Investing Billions In?Apple
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