Five important things that parents need to teach children about money

The Lethbridge Sun Times | By Scott Schmidt | October 14, 2009 | read source

Every parent understands the importance of equipping their children with ABC's and 1-2-3's but how many think to offer their preteens investment advice?

According to Darren Weeks, founder of Fast Track Group, a financial education and investment company based out of St. Albert, Alberta the answer is not nearly enough. Weeks, who travels from city to city spreading his Fast Track to Cash Flow method, recently made a stop in Lethbridge.

He says the No. 1 way to reach financial satisfaction is to start learning about money and what it can do for you as early in life as possible. Over the years of being an accountant, advisor and father, Weeks has come up with five essential practices to teach your children.

1. Save what you earn and set goals — This is the piggy bank concept at its finest here. Weeks says even the youngest of children should be saving up for things they want, like his seven- and four-year-old, who both have pretty substantial goals set for their savings. "My kids already have the goal of owning a car because daddy had one when he was 16," says Weeks. "If you set that goal when you're 15, it's going to take a long time, just like saving for school, so why not set those goals early with your kids?" Weeks says this idea is not about buying stuff but rather a way to instill goal setting, which is crucial to financial freedom. He also insists a portion of his kids' savings go to charity to teach the value of helping the less fortunate.

2. Don't borrow what you can't pay back — Simply put, Weeks despises debt. He calls it one of the greatest social diseases of our time and feels it imprisons people in careers they hate and causes unnecessary stress and anxiety. "Teach kids early not to buy what you can't pay for," says Weeks. "Unfortunately credit is just so available but you will never become rich while you're in debt. Period." Weeks says this concept takes an extraordinary amount of discipline because it's so easy to acquire debt through credit cards and loans but you can teach smart habits by starting as early as possible. And if they can get through the early part of adulthood debt free, they are a long way ahead of the game.

3. Knowing about money creates wealth and proper investments later in life — Weeks says to teach kids how money works for you. He says investing is a great way to make additional money with little to no work. If the goals set for the savings are short term, Weeks suggests the bank is the best place to keep them but if the goals are long term, such as a car or education, investing is a great idea. "If you understand how (money) works, it will work far harder than you ever could once it starts to grow," says Weeks. "Teach them about the types of investments available as well as how to monitor the growth. It's capitalism at its finest."

4. It's what you do with money that makes the difference — Weeks says to teach your children money is neither good nor bad but that what they do with it is what counts. All of the methods taught by Weeks are geared toward reaching financial freedom but how that money is used to aid others is of most importance to Weeks. "Don't teach your kids that money is dirty because it can be very helpful to others," he says. "The more money you have the more money you can give away." Weeks says his family vacations in countries less fortunate than Canada so his kids can understand how lucky they are and the importance of giving back.

5. Smart budgeting creates smart buying — Today's society is very much driven by consumption of product, and constantly buying bigger or better to satisfy our appetites is simply reality, according to Weeks. He says by instilling all these proper values into children you can actually teach them not to participate in these practices. "My son wanted a $200 hockey stick," remembers Weeks. "Well, when they're making $20 a month because a tooth falls out or they do some chores, and a third of it goes to spending right away, a third to savings and a third to charity, it takes an awful long time."

"So by the time he actually had the money, he realized he didn't need that hockey stick anymore." For more information on Weeks, who is touring Western Canada, and the Fast Track Group, visit www.fasttracktocashflow.com