We live in an age where a child can sail through school and university scoring high grades, but still leave college without a clue about basic finances. It’s an astonishing situation – not to mention a dangerous one for your kids if you aren’t ringing them up to appreciate and know how to deal with money. In this brief guide, I’m going to go through a few ideas you can use to ensure your kids are well-versed on how to save, avoid bad debts, borrow wisely, and a lot of more besides. Let’s take a closer look.
Talk about money
One of the easiest things you can do with your children to get them learning about money is by talking about it. Surprisingly few households do this, yet it’s such a simple thing to discuss. When you talk about the basics of saving, borrowing, investing and money management, it becomes part of the landscape for your children, and as they get older, they will understand a lot of the more complicated aspects of finances a lot easier.
Make saving rewarding
There are hundreds of ways you can encourage your kids to save – and it’s important to try and teach them about the benefits saving can bring. Let’s say you give them pocket money every week, but promise if they save half of it in a savings account you will double it after six months. It can have a profound impact on your kids, and shows them the value of interest rates and turns the idea of saving into something tangible.
Dealing with inheritance
Receiving inheritance money can be an exciting time for kids – but it’s also incredibly dangerous. Many youngsters without financial sense often receive large payments as an inheritance but end up blowing the lot. But there are solutions. For example, according to this Pacific Life structured settlement review, one good way of ensuring your kids don’t blow their inheritance is by setting up regular payments rather than a lump-sum. You might make sure they get some money on their 18th birthday, perhaps, and then again on their 21st. It’s a great way to help them out at critical stages in their life, too – buying their first home, for instance.
Teach them about budgeting
Budgeting is an important part of modern life, no matter how old you are. Yet so few kids grow up able to budget properly, and the impacts can be disastrous. Young adults who fail to plan properly often turn to credit cards to help see them through – and sometimes these debts can haunt them for many years to come. So, get started teaching them about budgeting from as early an age as possible – it will pay off for your children in the long run.
When it’s gone, it’s gone
Teaching your children about finite resources is essential if they want to learn that money doesn’t grow on trees. For some kids, all you have to do is go to a bank, punch a few buttons on the machine, and walk away with tens of dollars whenever you like. The reality is a little different, of course. Make sure that you children understand that money only comes through work, or through selling things, and that the bank is where you keep it to make sure it’s safe.
This post was submitted on behalf of PennyMindingMom.com.