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Personal Finances

Want To Raise Money-Smart Children? This is What You Need to Do

Want To Raise Money-Smart Children? This is What You Need to Do

Want To Raise Money-Smart Children? This is What You Need to Do

If you sit down with your kids down to share all of your lifetime hard-earned financial wisdom, they may not take interest, and you likely will lose your audience. On the other hand, many of us aren’t comfortable discussing money with our kids because of our lives own lack of financial savviness. Don’t worry! We have a better approach for you: Try to weave in small financial lessons while having everyday conversations with your children, and try building your kid’s money smarts with real-life examples.

 

Holly Isdale, founder of Wealthaven in Bryn Mawr, Pa., an advisor on financial issues said: “The whole ‘Pull back the curtain and share the information’ may make great movies, but it doesn’t make a great real life. You have to have these discussions all along. Everything is a teaching moment.”

Source: Market Watch

 

Beth Kobliner writes in her book “When our kids raise the subject, most of us go into panic mode, in short, we avoid teaching our kids the financial facts of life…” 

Source: Money.cnn.com 

 

Here are a few guidelines that many personal finance experts suggest to teach your child about financial responsibility:

 

Discuss their allowance

Teach your kids the ‘3S approach’: Spend, Save and Share, suggested by a New York psychologist Barbara Nusbaum, who specializes in the emotional side of money. She added: “An allowance is invaluable. That allows you to have small talks about money all the time,” including what they are planning to buy, what they are saving and what charities they are planning to support. 

Source: Market Watch

 

Share your credit-card bill with them

As your credit card bill arrives, you might review them with your children. While reviewing, discuss how easy it is to overspend with a card and focus on the interest you would be charged if you fail to pay off the balance.

 

Take them with you for grocery shopping

Supermarkets are the best place for all kinds of money conversations, discussing needs and want, sharing thoughts why items worth priced at $4.99 rather than $5, how to use unit pricing, which items are on sale and what you would be able to save when purchasing items on sale, etc. 

 

Nusbaum says, “In our culture, there’s a deliberate confusion of needs and wants. As parents, we need to help our kids figure out the difference.” 

Source: Market Watch 

 

Open a bank account

The founder of NextGenPersonalFinance.org, Tim Ranzetta, which offers personal-finance education to high-school and college students added his views by saying, he plans to open a checking account for his daughter to build up the sense of spending, savings and keeping track of her own finances by reviewing monthly bank statements. But first, he is going to teach her to examine the bank account agreement, while focusing on overdraft protection. He added: “Kids are going to tune in a lot more when it’s real.”

Source: Market Watch 

 

Discuss the week’s highlights.

Nusbaum suggests, “At dinner, have a conversation about what happened this week that you’re grateful for. Your kid says, ‘l love my dance class.’ And you can say, ‘How did those classes come about?’”

Source: Market Watch  

 

This is how you can get a chance to talk about how money is earned, how much family spends and how to set financial priorities by listing most important things on the top. 

 

These frequent conversations will help parents and make them comfortable, especially when it involves talking about their own finances. 

 

Nusbaum noted: “Many parents don’t want to talk about money.But if you don’t, you’re abdicating responsibility.” 

Source: Market Watch 

 

Ask yourself…

 

When do I need to start the money lesson? 

Money lessons should start early in life. According to Dee Shepherd-Look, a retired professor of psychology, and clinical psychologist recommended starting an allowance when your kid enters the first grade and gradually increase the amount as they age. “This way it becomes a normal part of the family routine.” 

 

How much should it be?

Kobliner said, tie the amount to the child’s age, so a 5-year-old could get $5 a week, and 10-year-old gets double. 

She added: “I realize $780 a year in walking-around money for a 15-year-old is nothing to sneeze at. So, of course, adjust the allowance amount according to your survey of what other parents are doling out, as well as what works within your family’s budget.” 

 

What type of allowances needs to be covered? 

As children grow, parents should outline what allowances they will cover now and in the future. 

Kobliner said, “Once they hit middle school, you still pay for the basics, but maybe for the school year when you go shopping, you cover three pairs of jeans, and if the kid wants an extra cool pair, they have to save for it or pay the difference.”

 

She added, “If they want to go out to dinner with friends thatcould be on them. You can have those rules, that’s a parent’s prerogative, but try to give kids as much freedom outside the purchases you really object to so kids can feel like ‘this is my money.” 

 

According to some experts, appreciate your kids by paying them a small amount for their efforts. Some tasks can be paid, according to Shepherd-Look. Children need to maintain themselves and be part of the family, like cleaning their rooms and picking up toys—which should not be paid. Responsibilities like yard work should be paid to encourage them further. 

 

“Kids need to be part of the family. In today’s world, money is an important thing to have, and it gives them a little a bit of power and control in their lives,” said Shepherd-Look.

 

Before settling type of allowance, outline the expectations clearly and keep it consistent. 

 

Kobliner said added, “Whatever your method is, the most important thing is you don’t change your mind.” 

 

Should you have any questions related to managing your finances, please contact our counselors at www.unitedcounselors.org for further assistance.

 

Source: Market Watch 

Source: Money.Cnn.com