3 Important Money Lessons Your Children Need to Know
October 29, 2018
Over the years, parents teach their children all sorts of things — how to tie their shoes, throw a ball, and drive a car. By the time they are young adults, many of the basic lessons have been taught. However, parents can still help their children get off to a positive financial start in life by talking to them about credit cards and saving for retirement.
1. School of Hard Knocks
Starting out on your own can be difficult. College costs have risen dramatically, so many graduates are saddled with significant student loan debt, especially if they've obtained post-graduate degrees. Housing costs also have risen, making it harder to purchase a home. Children who are used to their parents' standard of living may have a tough time adjusting to lower income levels while they're establishing themselves in their careers.
Providing your children with some smart financial planning strategies — including the ability to create a simple budget — can help them get off to a good start.
2. Get a Good Credit Card Habit
It's easy for young people to receive credit cards and even easier for them to get in over their heads with credit card debt. So if you can, talk to your kids about credit cards before they have one. Since credit card companies target college students, your child might already have a credit card — but it's still never too late to learn good credit card habits.
Teach your kids to pay their credit card bills on time, pay off their balances, use low-interest cards and not to purchase an item unless they can really afford it.
3. Start Saving Now for Retirement
When your children are just starting their careers, retirement is probably the last thing on their minds. Still, if they start to routinely save a portion of their paychecks now, it could make a huge difference in how much they're able to accumulate for retirement. Young people can take maximum advantage of the power of compounding to grow their savings. Investing in tax-advantaged accounts can make reaching long-term financial goals easier. So, encourage your children to participate in their employer-sponsored retirement plan or to consider contributing to some other type of retirement savings account.