For all the topics covered in schools today, most classrooms skip the basics of home loans, credit card interest rates, and the smartest ways to invest. Many kids will take macroeconomic theory before they even learn what a DTI ratio is. This is exceptionally unfortunate because it’s all too easy to prevent major mistakes with just a little extra education. Greenberg Financial Group has a few tips for parents to break down these concepts so they can sketch out the basics of a financial education.
Saving is always the best place to start to start managing your childrens finances. Whether your kid gets a cash birthday present or a paper route, they need to learn what it means to set aside a portion of the money for later. Savings is all about self-control, something that you’ve hopefully been working to instill in your kids since they were born.
As cliche as it is, your kids notice what you do far more than what you say. If you’re constantly spending money on things you don’t actually need, they’ll get the impression that this is something they can do too. Part of talking to your kids is simply getting over the stigma of discussing money. Your goal is not to scrimp on everything, only to make reasonably responsible decisions while discussing your progress with your children.
You don’t have to tell your kids how much money you make, but you can show them how you budget out your salary every week. You don’t have to tell your children that you once had trouble paying for groceries because you were in so much debt at one point, but you can tell them that you regret making certain decisions. Ideally, you’re covering the major concepts rather than the grittier specifics.
Lecturing to your children isn’t necessarily going to get you far, but asking for their opinion might. For example, you might want to discuss what kind of credit card you should apply for, taking into account everything from annual fees to interest rates. Let them keep track of the money you spend when you’re out and ask them for input about where the money is going and why.
It’s not just small children who learn from pretending — it’s actually a skill that all of us could benefit from. Giving your children an imaginary sum and letting them ‘invest’ it could prove to be one of the most valuable lessons they ever learn about wealth. Greenberg has an Investing 101 page if you have questions about how to get started.
Greenberg Financial Group knows that it can be difficult to talk about money with anyone in Tucson, let alone your children. But giving your kids a better idea of how to make financial decisions doesn’t just help them, it helps the whole family make smarter choices about how to spend a finite resource.
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