With Fathers Day upon us, children are anticipating presenting that special gift to their dad and visualizing the great happiness it will bring.  Of course, any present a child gives us brings great delight.  But what about parents?  Is there a special gift we can give our children that will make them truly happy throughout their lives?

In thinking about this question of gifts, I reread The Millionaire Next Door by Thomas J. Stanley and William D. Danko.  Although the bestseller is fifteen years old, the traits of millionaires are even more valuable now given the effects of the recent financial crisis and recession.

As the authors discovered, Financially independent people are happier than those in their same ie/age cohort who are not financially secure.”

Is there a gift we can give our children to help them be financially independent?

Dont confuse a large ie with being financially secure.  People with a high ie and flashy lifestyle who live paycheck to paycheck are not happier than those with less ie who live without debt and have money saved for retirement.  Status items are not only expensive to buy like a large home in a showy neighborhood they also require more money to maintain (e.g. landscaping, furniture, decorating).   The authors write, many status artifacts can be a burden, if not an impediment, to bing financially independent.  Life has its own burdens.  Why add excess baggage?”

One of the best gifts we can give our children is the knack for living within their means.  This one simple rule will help them be financially independent and happy.

What lessons should we teach our kids to set them on the right financial path?

The authors have several additional tips to achieve financial independence.  As soon as children have a job, they should set aside 15 percent of their ie to invest for retirement. This is a simple strategy for bing affluent.  On the other hand, if you feel the parents job is to supply all your childrens desires and support them economically, they may never learn to save and be independent. Saving wont be important; it wont be necessary because they are being economically taken care of.

Children are often addicted to an undisciplined, high-consumption lifestyle,” say the authors, and the parents indulgent lifestyle contributed” to that.

Thomas Stanley and William Danko found that independent of college tuition, more than two-thirds of American millionaires received no economic gifts from their parents.  And this includes most of those whose parents were affluent.”

What can you give your children to enhance the probability that they will be economically productive adults?  In addition to an education, create an environment that honors independent thoughts and deeds, cherishes individual achievements, and rewards responsibility and leadership.  Yes, the best things in life are often free.  Teach your children to live on their own.  Its much less costly financially, and, in the long run, it is in the best interests of both the children and their parents.”

The best gift you can give your children is to teach them to be financially independent: to spend less than they make and save 15 percent of their ie.

Tammy Kraig is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a fee. She specializes in working with couples to help them identify and work toward investment and retirement goals, long term or short. Contact Tammy for help with virtually any financial need.

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