Do you talk to your kid about finances. Chances are that you don’t. The reason a lot of adults struggle with managing their finances is because they did not learn important lessons as a kid. Every child should understand the value of a dollar.
Parents always joke that kids think money grows on trees. If you say that same saying about your child then it is your fault. You go to work to earn money and then those funds are expected to cover any and everything. Your children should know that money has to be earned and that you have to balance spending choices to get things you desire. Putting children on an allowance will provide so many benefits to both child and parent.
By placing kids on an allowance they learn that money has to be earned. They will also learn to save, and delay gratification to purchase things they desire. What it does for the parent is to make it easier to have conversations with their children about money. For instance if times are tough you are able to speak to the fact that you may not have funds to cover some of the things the kid desires, and because the kid now understands that you must work for money they will understand.
A lot of banks and credit unions will have special accounts for kids that pay special rates to promote savings. Sign your kid up. Take them to the bank and explain how certain accounts like checking or savings work. When time comes to pay bills show them the process. By letting them see how bills are paid they will have an understanding of how to deal with expenses. Introduce kids to investing at an early age so that they can develop an interest. Lots of parents set up education accounts for kids but rarely discuss the purpose or benefit of the account with the kid. Image what it will do for your kid to see an account start with a small sum of money grow over the years into something that will pay for college.
You may not think your child is old enough to understand finances or that it will not make a difference, but it will. Just remember that children tend to mimic the behavior that is shown.
Once you become an adult there is a lot you are expected to know in terms of managing your finances. You are expected to have credit or better yet good credit. Bills are expected to be paid on time. There is an expectation that you should be good with money. There are certain accounts that you should know what they are and have in your name; accounts like checking, savings, and retirement accounts.
At some point you come to the realization that money in fact does not grow on trees and you must work for every dollar you get. Just as you saved every little bit of money as a kid to buy things, so must you do in adulthood. Things tend to happen where you need to use cash that you had not planned on, which means you must set stuff aside for a rainy day. At some point in the future you will be expected to live for the rest of your life off of what you were able to accumulate. With so many things to learn about managing personal finances, lots of adults just have to pick things up as they go.
It is often said by people that if I knew then what I know now, that they would be so much better off. So it got me to thinking about what would have been beneficial to me as a youngster in terms of learning about finances. Below are a list of some of the things that stood out.
Cash is king. Having cash gives you a certain amount of flexibility, and even allows you to get certain discounts.
Having no debt is a good thing. Having no debt and no cash is a bad thing.
Planning for retirement and putting away funds should be done as soon as possible.
Saving money is a must. The best thing to do is automate savings so that way you do not have to worry about setting funds aside.
Its best to start learning about investing early on, that way you have more time to benefit from success or recover from lossess.
Credit can be a great tool if used wisely.
Money is also a tool and must work for you.