Financial Tips for Parents to Teach Their Children

(Family characteristics)

(Family Features) Children often dream of the day they can call themselves adults, but few look forward to – let alone think about – the financial reality of independence. It is never too early to teach your children how to save money and spend responsibly.

“Our job as parents is to prepare our children for success,” said Erin McCullen, director of deposit products at Bank of America. “Giving our children a solid foundation in financial skills like budgeting and saving is an important part of helping them thrive as adults and focus on the things they love.”

Consider these financial tips from McCullen:

Set a budget. Budgeting is a lifelong skill. Teaching young adults how to budget can help them plan expenses, save money, set goals, and overcome financial fears. According to a survey by Bank of America, 52% of Americans said they didn’t start budgeting until they started their first full-time job.

If your children are younger they likely don’t have a steady income, but you can still help them practice budgeting with allowances or gifts from relatives or friends. Keep it simple: Teach them to keep track of the money they receive and divide it into “Spend Now” and “Spend Later” categories.

Later, when you are helping your children create an adult budget, you will need to expand these categories to track expenses such as housing expenses and groceries. From there, measure these categories by their total monthly income. Ideally, they should be letting more money in than they go out. This process can help identify must-have and want-to-have purchases while highlighting areas where spending can be cut or room to save.

Save regularly and consistently. Consistent, automatic contributions to a savings account can create a mindset that will become valuable as your children get older.

“It’s never too early to open a savings account,” said McCullen. “Even if your children don’t have bills or financial obligations yet, teach them to set aside some of their pocket money or even gifts from family or friends. Helping children learn early on to save on even a small purchase can help them develop consistent saving habits over time. “

Young adults should also consider programs like Keep the Change, which help save automatically by rounding up debit card purchases to the nearest dollar and transferring change from a checking account to a savings account.

Create a financial checklist. Young adults have a lot on their minds at the end of their final school semester. As they start making the transition from college to work, they can help them stay on track by creating a checklist of the tasks they need to complete before they graduate and start their careers.

This list can include creating a budgeting and tracking strategy, opening a savings account to set aside money from future paychecks, or checking into a financial planner to discuss transitions and the future.

If you take the time now to teach your children strong financial habits, they can develop lifelong financial skills and prepare them for their next adventure. The healthy habits they build today can help carry them into the future and beyond.

Emphasize the importance of secure loans. Young adulthood is the right time to start building credit as it takes time to build a good credit score. Building credit at a young age can pave the way for major purchases and life moments as credit affects future living conditions, the ability to buy a car, and even job opportunities.

Let your children know about the steps they can take to start building credit, such as: B. Planning your credit card usage, never spending outside of your means, and paying your credit card bills on time and in full. You can also earn rewards while you are spending by making sure that your credit card rewards your spending. An option like the Bank of America Customized Cash Rewards card provides flexibility in accruing rewards in the category of your choice and can help maximize rewards while building credit.

Finance classes at any age

From preschool to college, each grade of school is designed to prepare children for lifelong success, but learning about finance is one area that can be especially powerful for children in the long run.

Consider these ways kids can learn about money during their childhood, as recommended by the experts at Bank of America:

Elementary School – Focus on the basics like saving change and planning how to spend it. When children start learning basic math, you can introduce them to the concept of creating an expense schedule. Apply these lessons to any toy or gift they want and teach them to put money aside until they have enough to buy the toy of their dreams.

Middle School – These early spending math lessons can be expanded to include real-world decisions and budgeting, including the things that should be considered and considered before making a purchase. Before kids go to the mall with their friends, highlight the thought process associated with spending before making impulse purchases.

High School – As adulthood approaches, it’s worth exploring the basics of creditworthiness, credit cards, investing, retirement planning, home ownership, and more so that teens can put these lessons into practice after graduation. High school graduates should also educate themselves about student loans, as debt often becomes a reality for those entering college, and understanding the facts can help them make more informed decisions.

Bonus Tip: If your high school students have a job, even if it’s only part-time, talking about taxes and how to deal with a constant income can be helpful. It can help them create balanced and accurate budgets in the future.

College – Build credit by opening a credit card account to help you achieve later goals in life such as: B. buying a house. With a career only a few years (or less) away, college is also a great time to start with the basics of 401 (k) s, set up an emergency fund, or even learn the basics of investing.

For more tips on teaching financial skills to your children, visit BetterMoneyHabits.BankofAmerica.com.

Photos courtesy of Getty Images

source https://collegeeducationnewsllc.com/financial-tips-for-parents-to-teach-their-children/