Everyone wants the best for their kids, and I’m no different.
One of the things I think is really important to have in place for our kids is to teach them about treating money responsibly.
But, how we make that happen?
I’ve spoken in an earlier vlog about a book by Ron Lieber, called The Opposite of Spoiled.
And in that book, Ron suggests employing a particular concept that you can explain to your kids and help them use it themselves.
Here is that simple concept and a supporting strategy to use with it:
- The fun ratio
The fun ratio involves calculating the number of hours of fun we are going to have against the dollar value that is spent on a particular toy or experience.
For example, if you estimate getting 10 hours of fun out of something that costs $1 million, then you can already tell that it isn’t going to be a great investment.
Whereas having 10 hours of fun from something that only costs $1 is a fantastic fun ratio.
If you can teach your kids how this ratio works, they will start to develop their own understanding of where value lies.
Not only that, but they can start making good decisions about how they spend their pocket money, as well as yours.
- Delayed gratification
In addition to the fun ratio, you can do something else to help your kids gain a responsible understanding of money.
And that is, making sure your kids don’t always get the best thing in the marketplace as soon as it is released.
The problem is, if you let have them the latest things first, every time, they might not learn to value it as much as if they had to wait for it.
A good rule of thumb to follow is that every time something new is released, they are the fifth or seventh child within a circle of ten friends that get that item, if they get it at all.
This will teach your kids the power of delayed gratification – an excellent concept for later in life when you’re dealing with more complex financial matters, like property investment for example.
So, if you’ve got kids, give the fun ratio a try and watch them learn to treat money respectfully and responsibly as they move forward in life.