Opinion – Grain in Grain: In finance, children learn by watching what their parents do

When you reach a certain age, or when commemorative dates like this Sunday occur, we remember the responsibility we have with those we love. We want to pass on to these loved ones everything we have learned. Often, too, what we regret that we didn’t do, so that they too won’t regret it when they reach adulthood. But, what is the best way to financially educate our children to avoid these future regrets?

It’s no use telling your child that he needs to be thrifty and save to have more in the future. Few will remember the sermons.

In The Secret of the Millionaire Mind, T. Harv Eker says, “You forget what you hear; you remember what you see; you understand what you do.”

It is necessary for your children or loved ones to see what you do and in the future they will understand when they repeat it.

What parent wouldn’t want their child to grow up to be thrifty and invest in order to achieve financial independence as soon as possible?

Financial independence does not mean to stop working, but to work on what you like without worrying only about the financial part.

Financial education should start at home. Living on less than you earn is the first principle.

Undoubtedly, less favored individuals find it more difficult to save, as their income is completely committed to basic consumption. But even in these cases it is possible to teach something by doing rather than just talking.

For example, you may not be able to save, but you can show your kids that your spending is within a budget by putting it on a piece of paper in front of them.

Many think about creating a savings account for their child before making their own. This doesn’t teach them how important it is to be financially independent.

It is very difficult for a child to understand that what you are doing for them is for their own good if you haven’t done it for yourself before.

This saved money will turn into consumption as soon as the child gets his hands on the money, because, perhaps, you didn’t save and used up all the money you earned.

Undoubtedly, the best thing to leave to a child are the values ​​he learned from his parents’ behavior.

On the financial side, there are some lessons you can pass on to your children, not by talking, but by doing.

The first is having a financial plan that gives purpose to the effort you and your family make.

Talking about money is taboo in families.

It is very important that the child understands how much their parents earn, what the total expenses are, how they are divided and why they must be within the budget, avoiding debts.

Instead of creating an account to make investments for your child, show yours. Explain to her the reasons behind the effort to save. All goals will be in the financial planning.

Gradually, the child will understand that the savings effort was to pay for her vacation, gifts, school and college. Who knows, she’ll even help with part of the allowance. Better for her to contribute to that fund than for you to simply save for her and give that money away.

Also, it is essential that she understands that part of her investments is for her parents’ financial independence. That way, she’ll remember that it’s important and there’s more chance she’ll do it for her when her turn comes.

You must show that you have everything under control, even if everything goes wrong. Therefore, taking out life insurance and explaining that, failing that, planning is covered is essential to provide security for the entire family unit.

This Father’s Day, take the opportunity to create a financial plan together with your loved ones. They will feel much more important when they realize that they are part of this plan.

Happy Fathers Day!

Michael Viriato is an investment advisor and founding partner of Investor’s House

(Follow and like De Grão em Grão on social networks. Instagram.)

If you have questions or suggestions for topics that you would like to see commented on here, please feel free to send them by email.