In a world where we’re constantly indulged in the need of futile gratification, we often lose track of what this costs us. We’re constantly borrowing money from banks, building up huge balances on our credit cards, all of this just to get newer stuffs, most of which we don’t even need exactly. Take a moment and think of your parents; did they spend tons of money to buy things just to show off to the society? Did they keep on loaning money to quench their thirst of hollow gratification? No, they didn’t. Their priorities were providing food, cloths, and shelter to their families. In this sense, we have a lot to learn from our parents and if we could understand the priorities of life, we could pass that knowledge to our children, creating a lineage that have a sound and smart financial knowledge.
Teach them about today’s money
Spending money isn’t what it was at our parents’ times. With checks, credit and debit cards, the flow of cash can be hard to track for a child. So you should start at an early age. Let them know that the credit card isn’t a magical plastic card that lets you buy things; it’s merely a link between you and your money in the bank. Tell them that ATMs are not machines from where money magically appears, but rather it’s your hard earned cash that’s coming out. As they age, educate them with more sophisticated lessons of late fees, interest, and savings. The more time you spend making them realize about money, the better are the chances that they’ll learn of its value.
College quality counts
In todays’ competitive world, earning a degree from a reputable college can be extremely beneficial. So to send your children off to a good college, you need to start saving as early as possible. Going to a high-class college can cost more, but that cost will be nothing compared to what they’ll be able to make after finishing college.
Save, Save, Save
Rather than choosing to just spend, spend, and spend without thinking twice, take some time before making any decision. The ads would try to make you believe that you need every item on the market, but consider your must-needs at the very start. Teach your kids about the importance of saving. If they want something, hand them an allowance and encourage them to save by agreeing to match their savings if they can reach a certain limit within a fixed time.
Help them as adults
Results from various studies show that most grown, independent adults aging 25 to 34 receive over $14,000 per year from their parents. This money is a great help for them to get started in their life. The IRS allows gifts up to $11,000 per year for each child and $22,000 for couples, without being subjected to gift tax. But make sure that you make it perfectly clear that this cash gift is not for making shallow purchases, but a way to help them get a better start.
It’s important that you become a role model to your children for making financial decisions. Mouthful of advices and wise words won’t make a difference if you make illogical financial decisions before your children.