Good advice from Gary North on how to teach your children about money management, investing and real estate.

Q & A With Gary North

Age: 70/76; occupation: retired GM; location: AZ & MI; assets: two homes worth $1M, $250K mortgages. $70K/yr current income (GM pension & Social Security). $100K savings.

Should we sell both properties, buy less extravagant, or keep lifestyle with only one house until end? Children want nothing.

If you really mean "we," then I advise buying lifestyle. I always recommend buying lifestyle. You must be very clear that your real estate is foundational for your lifestyle. If it isn't, downgrade. If you must live in both Michigan and Arizona, can you lease the lifestyle you want in a mobile home park in Arizona? Or Michigan? Or both? Why do you need to own? If you can buy at $20 per square foot by buying a used mobile, why not?

If you can downgrade your housing, sell both homes and move into the least expensive comfortable home that is close to the children. If they are scattered geographically, move close to the one who will take care of you if you become incapacitated, and who will inherit a double portion of your estate for his trouble.

With the money from the sale of your two homes, buy rental housing. Get the inheriting children to do the management for (say) 25% ownership. Let them inherit the rental units they manage. You keep the income. Talk to a CPA about setting this up. Then get a lawyer to execute the ownership structure.

Your children probably need capital management skills. Find out early which children have this skill. Or, if the children don't want to do it, make a deal with the grandkids. That will do them more good than a college degree.

In this regard, read the next section.

Give Your Kids a Financial Education

Age: 45; occupation: computer systems QA; location: Toronto, Ontario, Canada; earnings: 100K/year; house 320K (70K mortgage); savings: 200K.

I have an 8 year old child. What kind of life-education savings/earnings program would you recommend for him?

Since children rarely pay any attention to what parents recommend, why not recommend becoming the next Warren Buffett? If he does, your golden years are secure.

Help Your Child Start a Small Business

I recommend helping him to start a small business. You become a co-investor. Tell him if he makes so much return on his money over the next year, you will add another $1,000 to the capital base. Then show him how to start a small business.

If you don't know, find out about Junior Achievement. It's a high school program, but the high school's advisor has information on what kinds of projects might work.

He can always mow lawns to get started.

Tell him to tithe 10%, save 20%, and re-invest 20%. You match his investment. If he invests more, so much the better.

The goal is for him to hire five guys to mow lawns with equipment supplied by your son. Then rake leaves in the fall and shovel snow in winter. Or become a chimney sweep. Again, he must work to become a manager. Let others work for him. If his grades fall lower than Bs, stop the money matching. Get him hooked on serving others. If they will pay him, so much the better.

As for college, he should pay, not you. I have written about this. Never Pay Retail For A College Education: How To Get a 4-Year College Education for Less Than $7,000