At the foundation of your children’s financial intelligence should be this undeniable truth: It is not the amount of money you have, but what you do with it that matters.

This is true for a child managing a $5-dollar-a-week allowance or a corporate executive with a $5,000-dollar-a-week salary.

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For the better part of my life, I didn’t know this truth. On the contrary, I believed that more money was the answer. I was convinced that if we just made more money, won the lottery, or received some unexpected inheritance, all of our money problems would vanish. But the more we made the worse our problems became. Because I didn’t know how to manage what we had, more would have never been enough. We didn’t save, we didn’t give, we didn’t plan, and we had no idea where all the money went.

Unless your children learn simple, wise money management techniques, more money will never be enough.

The simplest way to get started building financial intelligence into your kids’ minds and hearts is by putting them on an allowance and then requiring them to suffer or enjoy the consequences of their financial decisions.

Here are five good reasons to put kids on an allowance program:

1. Teaches kids about real life

Nothing beats an allowance for a hands-on course in values. Having their own money teaches them about responsibility, consequences, saving and charity.

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If you’ve ever been in serious debt or are right now you know the feeling that your creditors own you lock, stock and bank account. I’ve been there, I know.

Debt steals your freedom one option at a time until you become its prisoner.

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Debt keeps you chained to a job you hate. It keeps you stuck in the past, unable to move forward in life. And big debt causes terrible stress that makes it hard to breathe, keeps you awake, spoils relationships and zaps the joy out of living.

It makes sense that if debt steals your options, then repaying debt creates financial freedom. But that’s not necessarily true.


RELATED: The Difference Between Safe Debt and Stupid Debt is Huge


If you spend just the amount you earn, you won’t be living beyond your means or creating new debt to bridge the shortfall, but you will be broke at the end of every month spinning your wheels, living from one paycheck to the next.

The first rule of sound money management is to live below your means—spend less than you earn. This means creating a margin between what you earn and what you spend. The secret to finding financial freedom—freedom from financial worry, fear and want—is in the gap between the amount you earn and what you spend.

The bigger the gap, the more freedom you will enjoy. It’s the money you don’t spend that gives you the freedom to grow your dreams and prepare for the future.

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Her letter was long. Page after page she went on about every aspect of her miserable life.

In between the accounts of her husband’s unemployment and her high blood pressure, this woman managed to weave each and every detail of their broken down cars, leaking roof, busted faucets, ungrateful children, delinquent taxes, nosy neighbors, empty retirement account and unpaid bills.

I’m telling you, by the time I reached the word that for me spelled relief (Sincerely), I was nearly worn out.

Couple-Jumping with Joy above their circumstances

My immediate reaction was a sympathetic, “Oh, you poor thing!” I mean really, the way she carried on I was nearly convinced she was enduring troubles and pressures way beyond the legal limit. Her situation as she described it did appear to be without solution.

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1. If last week’s Saturday blog stats hold any meaning at all, it appears my readers enjoy a numbered, quick hit list of, well … random things.

 

2. I love to knit. It’s not the least expensive hobby in the world, but I do enjoy a good Yarn Sale. This woman, on the other hand, knits for free—dubious as her sense of style may be.

 

3. People who consistently save 20% of their income can do that because they scrimp on this one thing you probably don’t.

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When I was young and stupid, I accumulated more than $100,000 in unsecured, credit-card debt. And you think you’ve got troubles?!

I didn’t get into that mess overnight. It took me 12 years and myriad terrible financial mistakes to do that and in the process, nearly ruin my life.

During the 13 years it took to get out of the mess (paid back every nickel with no concessions, settlements, negotiations—or bankruptcy) I learned how important it is to deal with mistakes as they happen so they don’t turn into major setbacks.

No one is perfect. You’re going to make mistakes, and when you do, you need to know how to react and what to do to minimize the damage.

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1. I love coffee. The real stuff. Next best is a fun email I get each weekday morning—Morning Brew—that gives me a quick rundown and a jump on what I need to know about what’s going on in the world—with super brief summaries.

If I worked in an office with a watercooler and my fellow workers and I congregated around it, Morning Brew would give me confidence to contribute to the conversation. Or at least understand what others are talking about. Morning Brew makes me feel smarter and makes me laugh, too. Check it out. It’s free.

 

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2. Here’s a list of 2019 Sales Tax Holidays by state. One thing to note, not all states hold sales tax holidays. Some are annual and recur under legislation, while others that are non-annual require legislation each year.

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Graduating from college is one of life’s most thrilling events. Finishing my degree, walking the aisle and receiving a fancy document in a leather-bound case remains one of the high points of my life.

A diverse group of young adult graduates

Leaving college life behind, I was ready to live life to the fullest, whatever that meant. I was so over living under campus rules, grueling classwork, never-ending papers, mid-terms, and finals. I was ready to begin life in the real world.

Unfortunately, I still had a lot to learn about managing finances. I knew nothing and worse, wasn’t aware that I knew nothing. What was there to know, anyway?

Sadly, I am not alone. Today’s graduates are smart but generally financially ignorant.

For college graduates gearing up to enter the real world, I offer the following for starting off on the right financial foot.

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Last week, as a grateful family and community welcomed home 8-year-old Leia Carrico, and her 5-year-old sister Caroline, who’d been missing for two days in the Northern California wilderness, I was moved to tears by the bravery of these adorable girls and their stunning ability to move quickly into survival mode.

Two cute kids hiking in the forest depicting the need to be able to survive a crisis

Stock photo 123rf.com

Could you live through such crises? How about an income disaster? If you get the infamous pink slip tomorrow, will you know what to do? 

Don’t panic

It is essential that you keep your head and your cool, as demonstrated so aptly by young Leia who told reporters, “We needed to find shelter fast!”

The first few minutes of any crisis are critical. If you lose it now, you will waste precious energy. At the moment of impact, take a huge deep breath and stay calm. While a job loss can be a devasting shock, it is not life-threatening. There is a way out and you will find it.

Rally the troops

Your attitude will make or break your ability to lead in a crisis. Equate survival with adventure and exciting new opportunities, resiliency, and creativity.

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