Give Your Kids Some Credit: Teaching Children About Money
If you are a parent, one of the major responsibilities you have to your children is to make sure they are ready to enter the adult world when they leave the nest. This includes financial know-how, although most parents do not consider speaking with their child about credit and debt until it is too late. If your child is old enough to make and spend money, they are old enough to understand the basics of good credit and its importance, so you should speak with your child regularly about this to help them prepare for the future.
Most children receive some form of allowance from their parents. If this is an option you choose, you are helping your child learn the first step to creating good credit-managing money. Teach your child the basics of budgeting, such as how to balance a checkbook, when they are of an appropriate age. Also help your child open a saving account to start saving money for the future. Even if the bank account never reaches a larger balance, it still teaches your child the importance of saving for the future.
Credit cards are difficult for most children to manage, so it is in rare cases that a teen should be allowed to have one, especially one which you pay off every month. Unless you intend to do this for the rest of your life, paying your child’s credit card bills or other debts leads to irresponsible misuse of these tools, which can hurt them greatly in the future. Good credit only is possible for adults who are responsible with their money. Instead of allowing your child to have a credit card to use all the time, instead have them keep one card in their name for special occasions or emergencies. If they start to misuse this card, cut it off immediately. Rather than keeping a credit card, allow your child to speak with you if they feel like they need money in advance and be open to their ideas.
Lastly, you can help your child build credit by putting one of your own bills in his or her name. A small utility bill is a good option for this type of deal. You child does not need to pay off this bill every month by him- or herself, but rather, it is simply a way for your child to build good credit, and since you have to pay the bill monthly anyways, it doesn’t make a difference who’s name it is in. You can get your child involved in the process by having him or her remind you when the bill is due every month and keep record of the payments. This teaches good habits for the future, and getting into the habit of maintaining good credit is the most important thing at this stage. You can protect your child from debt in the future by teaching him or her these lessons while still living at home.
Tom Ambrozewicz
http://www.articlesbase.com/non-fiction-articles/give-your-kids-some-credit-teaching-children-about-money-66102.html
Filed under: kids make money
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7 comments
Is it wrong to teach children about money from your own mistakes?
My wife and I have had a history of being grossly financially irresponsible We are currently halfway through paying down $68K in credit card debt which is now $37K.
We have had some lifestyle changes, which I welcome, and she despises. We continually argue about whether the children should learn from our mistakes.
My daughter is enrolled in Ballet. Ballet is running $54 per month. I have been trying to eliminate this expense because I think it is ridiculous that we are spending this money. My wife believes this will destroy my kid’s childhood.
My idea is to give my daughter the $54 per month in a savings account and eventually invest it to teach her about money. I think teaching her about saving money is more important than her learning how to dance.
Am I being a complete Pr*ck, or am I right.
Speaking from the child’s perspective, you are completely right. My parents never taught me to be financial responsible so I’m in a huge sum of debt, too. Sure, they always told me work hard for what you want in life but they never taught me how to save and invest nor how to budget. I know I can’t blame them for all my financial troubles but I DO wish they would have told me. I understand your wife wanting to give your kids a better life than what she had growing up, but she can sacrifice the $54 dance class for free classes somewhere else.
You both want what’s best for your kids’ futures, so neither of you are wrong. Some compromises will just have to be made.
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No, it’s good idea you are right. I’ve learnt about money and relationships through my parents mistakes and I know throwing money at things doesn’t solve anything. Think about it in a year the $54 will become $648 plus the interest the account makes. Not having dance lessons won’t destroy your kid’s childhood. Not having fiscal stability and something to fall back on when your kid is older will destroy your kid’s future. After all the best way to learn is from other’s mistakes.
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i think that you should teach your children from your mistakes, my dad dose that cuz he has money problems with our resturant.
he tells me to always save up and never spend money for no reason he always tells me stories about anything that had happened to him.
but you should tley your children have their childhood then when they are older they will be happy to remember thing in their childhood and that a good thing right?
good luck!!!!!! =p
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I grew up without ballet lessons and I turned out okay. It didn’t destroy my childhood at all. My parents were very poor and always fought over money. The only way I ever got anything was to work for it. Is your daughter old enough to work? Can she earn $54 per month to pay for her own ballet lessons?
I do think it’s important for us to train our children about money. It needs to start early and be ongoing their whole life.
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in a nutshell,.. i think you are right.
it must be very hard being in such a position. no disrespect to your wife, but i think she needs to get a reality check. In these difficult financial times esp, one needs to focus on dealing with necessities rather than luxuries. and ballet, amongst others - is a luxury.
i mean, couples need to pull together in times like these. little sacrifices need to be made, for the greater good…
it makes alot of sense to do so. idk…
plus, kids need to be taught the value of money, and learn that they cant always have what they want.
i mean, i hardly ever got the luxuries i thought i needed as a kid, but i turned out pretty much ok. i learnt to value and appreciate things.
i hope you manage to make her see the sense in your reasoning. cant imagine it will be easy.
best wishes.
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Teaching your children how to handle money and become financially responsible is a parent of parenting that is often neglected. I wish I’d had that kind of training when I was growing up. As a parent of adult children, I didn’t do much better, we were too busy living from pay check to pay check.
The trick is to teach your children to not make money a god in their life but to handle it responsibly.
It sounds like the ballet is a real sticking point. Are there other areas where you can cut back to keep that in the budget? If your daughter really enjoys it then try to find a way to keep it. Take your daughter out on a date (lunch at McDonalds) just the two of you and ask her how she feels about ballet. If she’s getting tired of it then perhaps there’s something else she could do that would be fun and not cost quite as much.
There needs to be a little bit of money for fun, otherwise life gets too mundane and depressing.
Does your wife had dreams of the ballet lessons leading to something greater in the future for your daughter? Was ballet something she felt deprived of in her childhood? It just sounds like there’s something behind her decided opinion about the ballet lessons.
Is is possible to discuss the ballet issue without an argument breaking out?
Perhaps you could "discuss" it in e-mails to each other rather than verbally. I know I can sometimes express myself better by writing it down than verbally. You could each have your own yahoo e-mail account and try to tdiscuss it that way.
Besides, it is my opinion that children need to be exposed to a lot of different things as they grow up which gives them different skills, expands their learning, and helps them to find out what they like. These experiences can lay the foundation for their future and could help lead them to a particular career.
It depends on your daughter’s age as to what you would teach her about finances. A very young child would have several pots for their money. 10% of what a child gets should go to the church offering (if you attend church) or to a charity. 10% should go for a savings. From here you could add another 10% or divide the 10% savings in half so there’s a short term and a long term savings goal perhaps with a picture of the item(s) being saved for, then what’s left is for spending as she sees fit. When the spending money is gone, it’s gone until she gets some more.
If she’s older then definitely a savings account would be appropriate. But still keep the 10% for church or charity. I would also have her save up for something specific that she wants besides having money in her savings account. The item she worked and saved to get will be much more appreciated.
It seems to me that there is a mind set that’s tied to being successful financially and that way of thinking should be taught as well. I’m talking about the way one regards money, such as seeing it as a tool, that there are boundaries to set and not to be crossed, and such. I’m trying to figure that part out still.)
As for your wife’s attitude regarding the changes you’ve had to make perhaps you can have a discussion about that through e-mail. Find out what her expectations are or were. Let her know that once you’re free and clear that circumstances will be better but that some of the changes may stay in place so you can then begin to save money and invest money for your future. (I know that when I get upset that quite often it is because I had an expectation that wasn’t fulfilled or was shoved aside or something.)
If things are bad enough between the two of you perhaps you need to get some counseling.
By the way the link below might be helpful for your relationship with your wife.
I hope this was helpful.
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http://www.familybuilders.net/marriage_articles/ten_rules.htm