Money Lessons from the Pitbull of Personal Development I

By Larry Winget

Hey folks, the coolest stuff for kids to teach them about money. I LOVE this stuff, especially the 10-10-10-70 Piggy Bank. But first, let’s take a look at four money thoughts that can change your life.

1. How to make more money.

You can’t. That’s right; you can’t make more money. You can only earn more money. You aren’t the Treasury Department, and you don’t get to print it up when you need it. Money must be earned. Some of you will immediately respond with “semantics,” because you like to argue and would rather argue than think. But there is much more to this statement than mere semantics. We are at a sad place where people seem to have forgotten that wealth at every level is earned at some level. Too many people don’t understand that their money is a payment for a service rendered. They certainly don’t like facing the idea that the reason they don’t have much money is because they don’t offer much of a service, or don’t offer a service that is worth much.

Sadly, I have discovered that people don’t really want to earn more money — they just want to have more money. I guess the Money Fairy is supposed to slip into their bank account during the night and deposit money. Even the Tooth Fairy expects you to leave a tooth behind in exchange for the money. You give up the tooth, and the Tooth Fairy gives up a little coinage. That’s how the Money Fairy works too: You give up a little work, a little effort, a little service, and the Money Fairy shows up with a little money.

So if you want to have more money, read on.

2. How to have more money.

There are only two ways to have more money: increase income and/or decrease expenses. Hopefully a combination of both. This little principle works for government, business, and individuals. I’m not going to spend any time here explaining what you could do to increase your income, as that is up to you, your talents, and the time available. And if you want to know how to decrease expenses, just look at how you are spending your money and figure it out. It’s not hard to look at your spending to evaluate what you need, what you want, and what you can live without. It’s all about priorities. So,

3. Set good priorities.

Your time, your energy, and your money always go to what is important to you. When I was doing my A&E television show, Big Spender, I would spend 10 minutes walking through someone’s house, another 10 minutes looking at their checking account and then their credit card statements, and I could tell exactly what their priorities in life were. I had a couple that spent 40% of their income on food. You can guess their size probably, but it was more than that. Food was their obsession. It was their priority to the point that their bills and house and cars and even their appearance suffered. I had a father who spent more money on his three-pack-a-day cigarette habit than he did on making sure his kid had a roof over his head and a car to ride in and milk in the refrigerator. His personal pleasure was more important than his family, as evidenced by his spending. If you spend more money at the mall each month than you do on having a secure financial future, then looking cute is more important to you than being financially secure is.

Finances are like a good crime novel; if you want to know who is guilty, follow the money! Take a few minutes and evaluate your spending to see what your real priorities are, and if yours need some realignment, then start now!

4. Get your mind right!

Each of these points I’ve made here are as much about how you think than about anything else. It’s about getting your mind right. Begin to think in terms of earning money instead of magically making money. Get your mind wrapped around the simple idea of increasing income and decreasing expenses instead of easy-way-outs and get-rich-quick ideas. And most importantly, get your mind right about what is really important to you. Is the temporary exhilaration of the moment more important than the long-term satisfaction that comes from investing your time, energy, and money in things that really matter?

12 Money Lessons for Kids and Parents Alike

When writing my Wall Street Journal bestseller Your Kids Are Your Own Fault: A Guide for Raising Responsible, Productive Adults, I did my own internal survey among my Facebook fans, friends, and followers and my database.

I asked the question of nearly 50,000 people: “What is the one thing you wish your parents had taught you that they didn’t.” I received nearly a thousand answers.

Ninety-nine percent (an overwhelming majority) of those answers said the same thing, “I wish my parents had taught me about money.” So do I.

Part of the reason people are in the mess they are today, part of the reason our country is in the mess it is in today, part of the reason the housing market is in crisis, part of the reason debt is up, bankruptcies are up and saving is down is because parents didn’t teach their kids about money and finances. Maybe it is because their own parents didn’t teach them about money either, or because they simply didn’t have the skills to pass on, or because they thought their kids would just “pick it up” along the way or develop good money-management skills by osmosis — I don’t know.

But the bottom line is that people don’t know much about money, and it is a parent’s job to teach them while they are young so they will have good habits when they are older and, hopefully, independent.

While there is no way to go into much detail about what you should be teaching your kids about money how to teach them in a blog posting (you have to read the book for that), I want to give you some key points to consider:

1. Give your kids an allowance.

Give the same amount on the same day every week — just like you get your paycheck. The allowance is for them holding up their end of the family responsibilities: picking up their stuff, helping around the house, getting their dirty clothes to the laundry area, carrying their plates to the sink, age-appropriate chores any kid can and should be doing to contribute. This allowance is paid regardless of how well the job is done. When a boss isn’t happy with performance, he doesn’t withhold the salary but instead counsels the employee about his or her performance. The same rule applies to kids and allowance.

2. The 10-10-10 Rule.

Save 10 percent. Invest 10 percent. Give 10 percent. Live on the remaining 70%. This lesson can be taught to any child at any age. And since about 40% of Americans live on 110% of their income and only about 7% have enough money saved for retirement, it is a good way for parents to live as well.

3. Involve your kids in household finances.

Explain how everything costs money and about your household budget. Cover income and expenses and how it all works and how you manage it. Again, age-appropriate of course. Kids need to see and understand that everything comes with a price tag — even the lights and the hot water.

4. Encourage entrepreneurship.

Teach your kids how to make money. Kids can mow lawns, babysit, dog walk, pet sit, and more. Teach them about customer service, sales, management, cost of goods sold, and profitability with each thing they pursue. Teach them to save, invest, be charitable, and enjoy the money they earn.

5. Teach math skills and their relevance to money.

Addition, so they can add up what they have and what they owe. Subtraction, so they can subtract what they owe from what they have. Pretty basic, but I promise most adults have not done that simple equation I just described. Also teach percentages and multiplication. Studies prove that the better you are at math, the more money you end up with in the long run. Your kids may hate math, but they love money, so teach that one goes with the other!

6. Teach about credit and interest rates.

Age-appropriate again, but the sooner the better. Don’t let their first credit card experience be their teacher!

to be continued tomorrow....... watch for it!