How can parents equip their kids for lifelong financial success?
More than anything else, providing for children is what keeps parents awake at night. Health insurance, life insurance, education funds, savings accounts, and even setting up real estate trusts can all be great steps in the right direction. However, the truth is that no matter how much wealth and passive income parents accumulate, there can be a massive variety of uncontrollable factors that can derail or sabotage the ability to hand that money on to future generations. The only really bullet proof way to ensure a child’s future is to equip them to provide for themselves and create their own income and wealth.
How can this be achieved in a time when even a degree from one of the best universities in the world doesn’t guarantee a job?
Turn Them on to Real Estate
Real estate has consistently proven to be one of, if not, the best wealth and income generators. Don’t deprive them of this financial tool. Turn them on to the power of real estate as a career and investment tool. Beyond the purely financial benefits, the freedom it can provide them could be one of the best legacy gifts of all.
Teach Them What Adds and Detracts from the Value of Real Estate
Sadly, even the majority of adults, including many that consider themselves knowledgeable about real estate, have an extremely poor grasp on what really makes a property valuable, what adds real value, and what can take away from it. Beyond home improvements and lot locations, and future economic forecasts, this is even more important when it comes to preparing future generations.
Take Them on a Drive-By
One of the best ways to teach kids about real estate is to take them on weekend drives to spot properties for sale. Even a 4 year old can quickly learn to spot a FSBO (for sale by owner) sign. At 5 or 6, they can surf homes on the web. At 10, they’ll instinctively be able to point out potential deals, or mistakes others are making.
Money Management 101
All the wealth in the world, or best stock picking skills won’t mean much without basic money management principles. Start early, and let them learn how to budget.
Real Estate Cycles
If one thing has been responsible for derailing real estate investors in the past, it has been understanding, or the lack of understanding how real estate cycles work. Don’t just give advice. Teach kids and teens why real estate cycles matter, and the best strategies for both good and tough times, and how to prepare for the next turn.
DIY Skills
While professional investors will typically, and almost invariably, graduate to exclusively using third party property management services, equipping kids with basic do-it-yourself and handy man skills can be incredibly beneficial. It can be hugely rewarding for them, help them save money on the way up, provide deeper understanding of real estate and management, and provide priceless quality time moments and memories.
Real Estate Investing Education and Resources
Despite best efforts, it can be incredibly difficult for parents to allow education to sink in. This makes passing down quality real estate investing materials and systems essential.
Equip Them with Problem Solving Skills
Perhaps more important than any specific advice, degrees or monetary head start, is equipping younger generations to be able to solve problems themselves. There will always be new challenges. Those able to take them on and create solutions will have a superior advantage. Today there is a fresh movement among progressive educators to reincorporate the arts into basic education. It has now been recognized that this precursor to the Maker Movement is vital to a well-rounded education, and the national economy as a whole. Now the White House and leading companies like Google are investing big in fueling this movement and creating opportunities for younger generations to start making and developing real problem solving skills.
Test Accounts
Many test accounts, and supervised account options have been rolled out for teaching kids the ropes of the stock market, and banking. So why not give kids the benefits of similar hands on experimenting and learning with real estate. This can scale from playing games like Monopoly, to tracking virtual portfolios. How about even gifting them a property or startup capital for investing, and allowing them to make educated decisions on the management of it. How much more of an advantage could be given? This type of teaching strategy could even be an entry to minimizing taxes, and in particular estate taxes, which could quite possibly spike substantially when it comes time to officially pass on the baton.
