Often times my sisters and I will talk about things my parents did to raise us. We sometimes compare their actions to the stories we hear from others. And then we realize, our parents may have been flawed, but they did a pretty amazing job raising intelligent independent adults. There is one thing, however, that I often wish my parents had taught us when we were young...FINANCES. Many parents may not think of this as an important part of raising their children. However, if you want your children to be successful in life, this really is a major thing they should be taught. You can begin by sitting down and discussing the family finances with your children. Show them your expenses versus your income and how much you have left after subtracting your expenses. There's one diary entry I remember from when I was in elementary school. I was angry with my mom because my birthday had to be postponed. I wrote that it was postponed because she had to by bread and other groceries. As a child I did not understand the concept of money and how paying bills and other expenses made you not have money (or leave you with very little of it). I was angry and hurt, and felt unloved. Perhaps if my parents had explained to me, had shown me the budget they had to work with I may have been more understanding (or not, who really knows). Then as I got older and got my first job at 16 I found I was spending all my money but had nothing to really show for it. Sure I had a savings account, then eventually a checking account, but there was never really anything saved in it. As I moved into adulthood my spending habits did not change much, I just had to make sure I had enough money for more expenses. Then I got a little older and got my first credit card at age 24. Then I found out I had really good credit and had "money" thrown at me. Now, I did know how credit cards worked and that I'd have to pay any money back but that didn't stop me from spending. I made a bad choice when getting my next car and ended up getting it for almost $7k more than the sticker price. Finally, at age 28 I lost my job and struggled to find a full time job for almost 6 months. My mom had to pay my car registration and one of my car payments. I ended up so far into debt there was just no way out. After much prayer and consideration I felt my way out was Bankruptcy. So at the age of 29 I had to file bankruptcy. Since then I have struggled to shed my old habits of spending and be more responsible with my money. For the most part I have been successful. So now thinking back on my experience and having to learn the hard way here is some advice for parents:
Teach your children the difference between wants and needs. Teach them that you a need must be fulfilled, but a want can wait. A want does not need instant gratification the way a need does. You can save up for those wants. In fact think over the want long and hard. If after a few weeks or months it is still a want, and you have saved for it, fulfill that want. For example, I wanted a VR headset, the games were fun and it was pretty good exercise. The headset cost about $800. Even though I could have easily saved the money and made this purchase I decided to wait a few months. After 3 or so months I still felt I wanted one but I didn't really WANT one. In other words, to me it was no longer worth spending $800 to purchase. Another example, I wanted an xBox 360. I loved the games on it and really liked playing the Kinect. So I saved my money for a few months and when I was done saving I decided that I still really WANTED the xBox, so I purchased it. The xBox was not a huge expense because by the time I made my purchase, it was not a new thing.
Teach your children about your family's financial situation. I'm not saying that if you have a million bucks in the bank show it to your kids. What I'm saying is show them the expenses that need fulfilled with your paychecks each month. Show them the numbers on paper. Then show them the income you have to pay those expenses. If your family is struggling and your children see this they may want to help the family cut costs or come up with ways to earn extra money. If you are not struggling financially you can help your children to understand WHY you are not struggling. Take the opportunity to teach your children how to create a budget and stick to it. Help your children to create their own budget. Even if their only expenses are to fulfill their wants, help them to understand that the new toy they want is something they should save up for. These are skills that, if learned early, will greatly benefit your children when they become adults.
Teach your children how to save. When we were little we would get Christmas checks from both sets of grandparents, then for our birthday we would get another check from my mom's parents. Since my birthday was right after Christmas I usually had more money than my siblings. So a week or two after Christmas my parents would take us to the store to spend that money we had received. I still remember the cool Barbie swimming pool I bought and set up. I did enjoy that Barbie pool (I put it on a towel in my room and filled it with water that night so my Barbies could go swimming before bed). In fact I'm sure I enjoyed all the toys I purchased with my Christmas/birthday money. However, looking back, it would have been more beneficial to me and all my siblings if my parents had taught us how to save that money. I received those checks for years, even if I still spent half the money on toys, I would have gone into my teens with a savings account already set up. So teach your children to save. Save that babysitting money, save that birthday and Christmas money, save that allowance. This goes back to teaching your kids to budget. When you help them create a budget include putting money in a savings account and an amount to be donated.
Teach your kids what a savings account is for. The savings account is not intended to be used as your overdraft account when you've spent all your checking. Your savings account is for...you guessed it, SAVING. This is something I still struggle with sometimes. Although, lately I've been saving money up then I use it to pay off some debt, like my credit card. Teach your children that when they put money in their savings account it's meant to stay there for a long period of time.
Teach your children to set financial goals. If you don’t have a reason to save your money, you are less likely to do it. Help your children set a financial goal. Older children may want to save up to buy their own car. Your younger children may want a certain toy or video game. Help them figure out how much they will need to save and what they can do to meet their financial goal as fast as possible. Don’t have them set just one goal, they need a short-term, mid-term, and long-term goal. A short term goal can be the toy your child wants to buy, a mid-term goal can be the car your teenager needs to save for. A long-term goal can be saving for college, saving to move out, saving to take a trip with friends. As they get closer to meeting their goals, help them set new ones.
If you, as the parent, have trouble with these things yourself you may find that teaching your children helps you as well. Set your own goals, create your own budget, save your own money, lead your children by example.
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