WellesleyWeston Magazine

FALL 2012

Launched in 2005, WellesleyWeston Magazine is a quarterly publication tailored to Wellesley and Weston residents and edited to enrich the experience of living in two of Massachusetts' most desirable communities.

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family matters "generate enough income" lives. They take pleasure in being able to provide for their kids and to be able to simplify their lives. Others have hoped to teach their children, but have not been able to find time to make it happen. Some choose to model financial responsibility themselves rather than instruct their children outright. Still others have made a strong commitment to teaching children to manage expenses, earn income, save a portion of their income and, in many cases, to engage in philanthropic behavior. Whether we parents are intentional about teaching our kids about money or not, it turns out that they learn most of what they know about money from us. The Charles Schwab 2011 Teens & Money Survey found that 82 percent of teens surveyed learned what they know about money from their parents. The survey also uncovered an opportunity: seventy-five percent of teens say that learning more about money management, including budgeting, saving, and investing, is one of their top priorities. Here are a few critical financial concepts that every young adult should understand: 1. Money does not grow on trees, but where does it in fact come from? In general there are three sources of income: earned income from completing household chores or from working outside the home, investment income from assets, and financial gifts. Many of us got "To build a solid foundation, young people need to be buying real income-producing assets…not liabilities." our first experience with income in the form of a gift from the tooth fairy or grandparents. Sometimes we spent that money; other times we put it in a savings account where it could earn interest—albeit not much in recent years—resulting in investment income. Gradually we experienced the con- nection between work and earned income by completing jobs around the house or working outside the home. Traditionally, after finishing college, young adults' financial goal has been to generate enough income to be able to cover their living expenses and save some portion of their income to be able to accu- mulate assets. The sooner that saving begins, the longer the period of time there is for those assets to grow. 2. There is a difference between assets and liabilities. Robert Kiyosaki, the author of Rich Dad, Poor Dad explains the differ- ence between assets and liabilities quite simply, "An asset is something 152 WellesleyWeston Magazine | fall 2012 MEDIA BAKER Y

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