Our topic is teaching our kids about money and how to manage it. Credit Card Debt: We should show our kids credit card bills and how important it is to pay them on time. You can teach your children the wide use of credit. You need to teach them about credit card debt. Credit is a privilege and not a right. We don’t want to end up with financial handcuffs. Don’t wait until your kids are in college until you teach them about finances. Give kids latitude, let them make mistakes and learn from them. Our kids are interdependent, but if they are not taught how money works and how to be fiscally responsible, they go to college and buy all kinds of devices, etc. Kids don’t always associate that there is debt associated with credit cards. Now, not only do they have student loans, but they have credit card debt. When they get out into the real world, they do not want to bring bad habits in their adult life. In high school, you want to help them open a checking account with their own allowance money. You can teach them how to make deposits, write checks, and how to balance a check book. That is very important and it will teach financial discipline. Kids needs boundaries, and the boundaries come from you the parent. When kids see something, they want it. The parents need to teach that you can’t get all that you want when you want it. Big Ticket Items: When a child reaches the age of 16, they usually want a big ticket item like an automobile. What do you do when a child wants a big ticket item like an automobile? Parents need to teach their kids that money does not grow on trees. You can teach your kids to contribute to that purchase. Kids can earn money by doing a summer job, or some other job so they can contribute to that purchase. Introducing Credit Cards: I think you have to be age appropriate in a way that is consistent with your beliefs when it comes to using credit. You can start a child with secured credit card or debit card and see how well they manage that credit. If they are fiscally responsible with that unsecured card, then that is a stepping stone for obtaining a secured credit cards that help them build credit for life later on with homes, automobiles, etc. Investing and Using Real Money: I mentioned that my grandson was not happy with his money statement and the interest earned. He then was prompted to learn about investing and how mutual funds work. First, you want to go to a credit union and open a money market account or savings account. Then look at the CD. It matures in a certain amount of time. Then you can have re-investment risk. Then the child can see how the money matures, and you can ease them into learning about mutual funds. Some parents have investment clubs for their kids. There are games on the internet and board games to teach your kids about money. There are kids at even 9 and 10 that can understand money in the stock market, but then I also see kids in high school and college that have no clue. Bring the kids gradually from savings, to money market accounts, to CDs, then mutual funds and investing. Visit my website JustAskFreeman.com for more useful tips on how to get the most from your retirement planning & Social Security benefits. VA | MD | DC . Also, download my free “SAFE MONEY KIT” to get the most from your retirement dollars. Tel: 1-866- 471-7233
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