I’m sure that many of us can look back and wished that someone had taught us about money when we were younger. Perhaps, that could have saved us from some of the financial horrors we had experienced in our lives.
If we take hard objective look, we would see that many, if not all, of our money problems were largely of our own making. We spend more, we save less, and we invest little or nothing.
We indulge ourselves in things that are not necessary and fail to give money all the respect that it deserves.
We don’t tithe.
We put our financial destiny into somebody else’s hands – whether it’s our employer, our government, or our creditors.
However, if you are keen on retracing your steps and finding ways to rectify your financial mistakes, your life will likely take a new turn altogether.
Although it may not be a little too late to make some improvements, it is much wiser to prevent the challenges from occurring than solving them once they occur.
One thing is for sure, if you help your child to learn how to avoid the financial pitfalls you have encountered, you will be giving him an invaluable gift.
Here are some great ideas about money that you need to discuss with your children:
Think Before You Buy
Let you child understand that before they set forth to buy anything, they have to consider its real cost.
For example, if they wish to buy an electronic worth $ 500, they should stop to think: Should I just spend this money today on this stuff, or should I invest the money with a potential for returning more money in the future? This is referred to as opportunity cost.
Teach them that should they want to spend their money on something, it has to be one that earns them some returns.
Savings and Investment
Many of us start by paying our bills, then having a little fun, and finally think of saving whatever is left. Unfortunately, this approach usually gets us nowhere when it comes to saving.
Teach your children to start with saving between 10-20% for every dollar they earned. It’s called “pay yourself, first.” Think of how much money you would save if you had started doing this since you were 14.
Secondly, show them how to calculate their earnings using a simple savings calculator. They can find these simple calculators if they search for them in the internet. In fact, the calculators will show them how much they can accomplish by saving a little amount of money every month.
Avoid the Debt Trap
Let them know about debt. One fact holds true, the average households have more than $ 7,000 in credit card debt alone, and a staggering number of Americans have debts in collection.
Oftentimes, children are bombarded with credit card offers once they enroll in college. Just imagine how best can your lifestyle get if ever you were debt-free. Therefore, ensure that you have taught you child how to avoid falling into the debt trap.
Start Building Their Credit
Start to build your children’s credit. You may consider co-signing for a credit card, if they’re not old enough to obtain one by themselves. Find a card that not only has a low rate, but has no annual fee as well, and ensure that you have taught them how to use the credit card wisely.
Another alternative is to take out a small bank loan. Many banks will be willing to give you a secured loan. This may require that you deposit a small amount in a savings account and subsequently borrow a comparable amount.
The reason that many young adults cannot buy a home for many years is that they lack a credit history. So starting early to help them build credit history is a good idea.
Monitor Their Credit Report
After some credit building activities, teach your children how to monitor their credit reports and check for any errors. Most of credit reports contain some mistakes that may not favor you.
We Receive by Giving
Teach your children to be giving. Allow them to choose the charity that they like and contribute to it. For a young child, it may not cost them much. Eventually, he will come to realize that giving affects him as much as it does the organization that receives the money.
The Dignity of Labor
Let them work during summertime. The truth is that all the teenagers wish to earn more money. Therefore, give them that chance to earn it and learn the virtues of hard-work. Kids that are computer savvy may start doing some freelance gigs on Fiverr or Elance, instead of playing video games or watching television all summer long.
Start Your Business
You should also start teaching them about entrepreneurship. Let them learn early that nothing beats running your own business and controlling your own destiny.
Encourage them to read biographies of successful entrepreneurs and learn how to develop the mindset of entrepreneurs.
Money is an important part of life. Money provides security, opportunity, and a greater ability to help others. You have a lot of control over the financial habits your children develop. Help them to have a financially successful life.