Teaching Kids About Money Mistakes
December 16, 2015 / Sara Davis / Get My Family Budget Under Control
Children know they can trust their parents to take care of them, give them nourishment and love and teach them the skills they need to be a successful person. There are many lessons parents teach kids, whether they are intentional or unintentional.
Many parents find their children reflecting the way they speak and behave. Whether they are emulating positive habits is up to the parent; children are sponges who take in nearly everything they see their parents do.
When it comes to financial habits, you want to make sure your children are picking up on the right skills.
There are many bad habits adults fall into when dealing with their money. Shaking these habits early is a good idea for anyone. For parents, though, it will not only help budget better for the family, but it will also prepare children for the day when they will be financially independent. Starting early is the best way to ensure future generations will know how to handle their money when it really matters.
Budgeting Your Finances Is Extremely Important
One of the worst habits people have is failing to budget, American Express explained.
Budgeting helps you to organize your funds and spend an appropriate amount of money on each expense.
To create a budget, first determine how much money you bring home in a month or year. Then, figure out some of the fixed regular payments you have, like rent, a mortgage or car payments. Subtract all of these expenses. Next, determine how much you generally spend on things like groceries and other essentials that have prices that might fluctuate from month to month. If you see areas where you can cut back, begin setting goals.
For instance, if the amount you typically spend on groceries seems high, find out how you can start saving money by shopping at a different store or finding coupons for the items you need to buy.
Rockland Trust explained that giving children an allowance is a good place to start.
Most children begin receiving their allowance at about eight years old. Parents give them this allowance in exchange for chores and daily tasks being done. However, it's important to consistent in their allowance.
The Week said it's easy for parents to give in to children who ask for more money after their allowance has been spent. But, giving them money whenever they ask for it will tell them that money is readily available any time they need it. It will also make the value of their original allowance, the one they got in exchange for work completed around the house, less significant. Instead, tell your children that their weekly allowance is the only money they will receive from you until the following week.
Stick to your word and hold your ground. They will soon learn to spread their allowance out to last the whole week, or begin to learn to save up for something they want. Talking to them about how to save money and how to look for discounts can also help.
If they want a certain toy, teach them how to shop around to find the best deal.
Misusing Debit and Credit Cards
According to Bankrate.com, 8 percent of people admit to only paying the minimum balance on credit cards.
Carrying around credit card debt can hurt your credit and wind up costing you even more in the long run if you have interest building on it every month. If you have several cards you use for purchases and continue to push off paying the final balance, your children will view using multiple credit cards for purchases of all kinds as a normal thing.
If you are stressing about credit card debt, you may not let your child in on this aspect of having a card. This reinforces that using credit cards is not only normal, but affordable.
So teach your kids how to properly use credit cards early on. Chances are, as adults, they will be using them to pay their own bills. Plus, credit cards are a great way for teens to begin building credit. Rockland Trust said teaching a teen about credit and helping them obtain a credit card or a pre-paid card to use for their expenses is a good way to teach them how to manage their money.
Hudson Valley Parent agreed teaching kids the best way to use credit and debit cards early on will help inspire good spending and saving habits in adulthood.
Teach them the difference between a credit card and a debit card and the benefits of each. Debit cards are linked to a checking account, so you are less likely to overspend. Show them how to track their spending each month. Credit cards, on the other hand, make it easy to overspend. However, using them wisely can help to build good credit.
Teach them about budgeting how much they will spend on their credit card and how to pay it off.
Remember, no matter how many times you tell a child something, they are always picking up on your actions as well. You may have to work hard to break your own bad habits to prevent your children from forming their own. In the long run, though, both you and your children will be better off.
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