You try to teach your kids the difference between right and wrong, to give them a solid foundation so they can lead a good life. You don’t want to send your children into adulthood unprepared to face challenges in their work or personal lives. Right? But are you extending these lessons into financial choices?
So many people struggle financially because they simply have never learned the money management basics that everyone needs to know. While it is possible to take control later in life, it is always better to get on top of your finances sooner than later. Maybe you are hesitant to talk about money or maybe you yourself were never given the guidance you needed, but now as a parent, but it is vital to have frank conversations with your children about money. A good starting point is to teach your kids the ins and outs of starting an emergency savings account. If you aren’t sure where to start, let me give you ten important points to get you on a good path.
Start Small – A few bucks here and there may not seem like much but it is money they probably would have burned through otherwise. Help them set up an account that they cannot withdraw from easily, such as an interest-bearing savings account.
- Set Rewards for Milestones – Saving can sometimes feel like a drag. Let them spend a set amount after certain intervals to show them the benefits of putting cash aside. Let them buy something at the six-month mark that they’ve had their eye on – without emptying their account – before they get back to saving. Setting goals, achieving them, and celebrating the accomplishment are valuable life lessons.
- Direct Pocked Change into Savings – While it may seem small, this is a painless, easy way to contribute to their savings. This is especially useful for younger kids who can start their savings habit by filling their piggy banks. Later they can open a savings account and take their savings habit to the next level.
- Lead by Example – Let them know that you are saving regularly, let them see you setting money aside for you and them. Make it clear that saving is something everybody needs to do.
- Credit Cards – Simply put, try to keep your children away from credit for as long as you can. When it’s time for their first card, consider co-signing but leaving it in their name. This way your kids will know you are monitoring and might be more reluctant to make glaring mistakes.
Even if you can’t accomplish all of these points, just getting a few of them ingrained in your kids will put them at a huge advantage. I will cover slightly more advanced points for your older children in my next post. If you want to educate yourself on these subjects, consider finding a qualified professional advisor who can help you evaluate your own financial situation and offer ways you can improve as well as tips on teaching your children. To see how your retirement savings is measuring up, be sure to check out my retirement quiz and see where you stand. http://erichutchinsonfinancial.com/retirement-quiz/
The opinions expressed in this commentary are those of the author and not necessarily the views of United Capital Financial Advisers, LLC. Certain statements contained within are forward-looking statements, including, but not limited to, predictions or indications of future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. This material is not to be relied upon as a forecast, or research or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. United Capital does not warrant the accuracy or completeness of the information. The commentary is intended for information purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. Past performance doesn’t guarantee future results.