Okay, no more mushy stuff, I promise. The article above has a great 15 item list, but I really honed in on these points:
- Only spend what you earn.
- Only allow yourself to spend 50% of that.
- Guide and advise but don’t dictate your kids’ spending.
- At some point, cut your kids off.
- Help your kids open a banking account…having my own account spurred me to save.
- Teach your kids how to balance a checkbook and what those numbers mean.
- Have fun going over compound interest…I loved learning what my money could do.
- Explain debt’s consequences…this works best if they already know about compound interest.
- Introduce investment ideas…my mom went over CDs with me when I was 10. They help teach patience too.
- Quickly highlight what credit scores are and what they’re good for.
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I start to bristle at the "At some point, cut your kids off." I would think that this should happen gradually. But I think flexibility is key.
ReplyDeleteMy parents cut me off because they didn't have a choice. It made me very responsible and serious about my studies. Perhaps there was some stress involved . . .I don't know how serious of a downside that was. That said, I can see why parents would want to continue to help their children if it was a possibility, but there are ways to go about this. Keeping adult kids as financially independent as possible is good for them--in my opinion.
ReplyDeleteI love the lessons you provide here, by the way. I often think that there are some financial ideas I learned much too late in life and all on my own. We learn about health, science, civic duty etc in schools, why not about financial literacy?
It is important to not only discuss what credit scores are, but how they are calcuated and what happens with late payments.
ReplyDeleteJust the other day one of the women I manage in my office was surprised when I told her that applying for credit cards hurt your score. She had no idea - this from a college graduate.
Unfortunately, I think I learned most of my lessons the hard way (trial and error). The biggest financial thing my parents taught me was my work ethic. It is still paying dividends to this day (hello March bonus).
ReplyDeleteAs far as, living below your means and managing credit properly, I don't think my parents ever did this well. When my father passed in 2002, I helped my mom sort things out financially. I found out then, that they were over $30K in debt. The little bit of life insurance my dad had (would love to get a hold of that agent), helped clear the debts, but left very little after that. My mom is surviving now, but could have been so much better off if her and my dad had done some things differently.
I hope I'm able to teach my kids, through the way my wife and I live, the lessons I've learned and why they are important.
Frugal Scholar, yeah, I might have summarized that a little too bluntly...gradual works too obviously. :-)
ReplyDeleteSimple in France, I would love to teach high school kids about personal finance. Too many of my fellow college students had no idea what was going on. So far I've started on my younger sisters, but they had the same parents I did, so it's like preaching to a choir. I might look into volunteering for an organization for youth in Houston...
ReplyDeleteKate, good point. My parents covered the ins and outs of credit reports, which was uber-important to my whole financial beginning...
ReplyDeleteMikeS, I'm sorry about your mom but I do think that it's awesome that your kids will have access to such great role models! I bet your mom appreciates that too...my grandparents have always hoped for better for their grandkids. :-)
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