Financial Education Starts at Home
While money management basics are one of the most applicable subjects for today’s youth, it’s often not a subject of importance in today’s schools. Like it or not, the fate of your child’s financial success has to start at home.
What can a lack of financial preparation cause?
- Several decades of student debt.
- Double-digit interest on auto loans and credit cards.
- Likeliness to be a victim of identity theft.
- Inability to get a mortgage.
- An underfunded or even unfunded retirement.
You next questions might be… what do I need to teach them?
Honestly, it depends on the age. If you’re not sure where to start, you can’t go wrong with these basics:
- Money comes from work - a little bit of elbow grease goes a long way. Completing chores is a great way for kids to earn money.
- Money pays for needs first and wants second. Helping your child define what is a need versus a want is crucial to starting them on a solid path to financial understanding.
- Save a portion of your money for future wants and needs. Encouraging kids to set a savings goal with a particular reward in mind is a great way for them to learn basic budgeting concepts.
- Spending money is fine, but make sure you have enough. Teaching kids that money is a limited resource is important in this day and age, where credit card debt is at an all-time high. Carefully consider whether you should supplement a child’s money supply when they don’t have enough to buy what they want. Teaching kids what things really cost and that they may need to save a little longer to achieve their goal is an important lesson.
Here are some good suggestions to help your child/children understanding personal finances.
- Teach them at an early age to be a savvy shopper with coupons or discount cards.
- Start a jar method with saving, spending and giving.
- Tax their allowance to get them used to income tax.
- Allow them to make their own decisions. This is important. Mistakes help. Children understand what NOT to do more quickly, and they more easily comprehend what you are trying to teach.
- Share your own budget. Children learn from example. Allow them to see how the family income is divided into percentages. Expenses, emergency fund savings, long-term savings (college accounts, retirement, future goals), and family fun.
Remember, financial wellness begins at home, but you’re not alone. As your Credit Union, we’re always providing educational support and staff resources to help you and your family lead a more financially secure life. Please check out our many services or visit any Center to talk with a representative today.