One of the most important keysÂ to establishing a legacy of multigenerational wealth is teaching valuable money lessons to our children. Unfortunately, though parents are the educators of first resort when it comes to learning about money, financial education at home too often falls short, if it happens at all. In fact, our children are moreÂ likely to be miseducated by ourÂ teaching and examples as parents thanÂ properly educated about money-smart choices.
The solution to this dilemma is one of the best books I’ve ever read for parents who want to raiseÂ their children to make good financial choices: Money Management From Grade School to Grad School by Ernest Burley Jr. (Vital Visions Publishing Inc.; $15). AÂ certified financial planner and the owner of Burley Insurance & Financial Services in Bowie, Maryland, Burley provides an easy-to-digest action plan for what to teach your children and when. His book delivers valuable and effective money lessons, strategies, and exercises parentsÂ can implement immediately, regardless of aÂ child’s age.
Many parents wonder when is the appropriate age to begin teaching their children about money. The answer: as soon as they startÂ asking you to buy things, which can begin as early as 4 years old. Money Management From Grade School to Grad SchoolÂ starts there and then provides key principles and practices you can implement with your child at every stage of their lives, from pre-school to when they moveÂ out on their own asÂ independent adults.
Burley provides money lessons parents can use to teach a childÂ everything from the importance of delayed gratification and a bias ofÂ saving over spending, to understanding budgeting, credit, debt, and even insurance. He even includesÂ strong, sound advice for financial decision-makingÂ for your children as they pursue dating and romantic relationships as teens and young adults. (As a staunch relationship education advocate, I view this as a major plus of the book.)
That BurleyÂ accomplishes all this in less than 150 pages is commendable, to say the least. Major concepts covered in the book include:
Patience, Explanation, Repetition, Reinforcement (PERR)
Burley stresses the importance of using the “PERRfect strategy” to teach your children good money management principlesÂ and to reinforce and build upon the lessons as they grow and mature.
C.R.E.A.M.: Cash Rules Everything Around Me
You may remember this as the title of a now classic rap song by the Wu-Tang Clan. Burley urges parents to use this concept to help their kids to have “a healthy respect for the power and prominence of money.”
However, Burley also stresses the importance of teaching children to keep the value of money in the proper perspective. “The point here,” he says, “is to emphasize the importance of money to sustain one’s self, not to forsake all else for money.”
G.S.L.: Give, Save, Live
Burley provides this as a quick way to teach one of the most important money lessons: How to categorize income (whether gifts from relatives, a weekly allowance, or a paycheck from a summer job)Â for purposes beyond justÂ spending.
G.S.L. (give 10%, save 20%, live on 70%) lays out the importance of budgeting that even a 5-year-old can understand–and most adults would do well to learn and implement.
Let me be as direct and to-the-point as I can: All parents with children ages 25 or younger should immediately purchase, read, and implement the money lessons ofÂ Money Management From Grade School to Grad School.
Black Enterprise Executive Editor-At-Large Alfred Edmond Jr. is an award-winning business and financial journalist, media executive, entrepreneurship expert, personal growth/relationship education coach, and co-founder ofÂ Grown Zone,Â a multimedia initiative focused on personalÂ growth and healthy decision-making. This blog is dedicated to his thoughts about money, entrepreneurship, leadership and mentorship. Follow him on Twitter atÂ @AlfredEdmondJr.