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Family Finances: Must-Have Discussions You Need To Have With Your Kids About Money

Many American adults have gone through some rough times in recent years due to their financial situation. Some overextended on housing while others splurged on unnecessary items. Sometimes, even when people make good financial decisions, other unforeseen factors can cause them to go into debt. Regardless, it is important to have a few important discussions on money with the next generation so they can find themselves in a good financial situation when they become more independent:
Family Finances: Must-Have Discussions You Need To Have With Your Kids About Money

Money Is a Great Tool

For those who are able to keep their finances in check over their entire lives, money can be a great tool to get whatever they need and a few of their wants as well. If they make good decisions and save money, they can use that to move where they want or help others who are in need. The key is to keep within the money that a job or other source of income allots each month.

The Seriousness of Debt

Those who are not able to keep their spending impulses in check will probably wind up in some serious financial difficulties. These difficulties could even include an inability to pay bills on time and a poor credit record. Consequently, people can have trouble getting a good job and even subsisting. Children should know that debt can quickly add up and easily becomes increasingly difficult to pay. They should know when to get professional help, and how to closely manage finances.

The Time Value of Money

Keeping money under a mattress is not going to do much good for most people. Over time, inflation will erode much of the value that this money could have earned. Those who are able to save and get a decent return of even 5 or 7 percent can see their money start to earn interest. John D. Rockefeller noted that compound interest was one of the greatest ideas. Teach them them putting money into an account for years can earn them more interest later on.

Plan for Retirement

Social security is not a sure thing for today’s children. There are some Americans that want to dismantle it, while others think it will eventually go bankrupt. With the unsure future of government retirement benefits as well as the demise of traditional pensions, it is incumbent upon today’s youths to plan for their own retirement. The time to start is with their first paying job.

Protect Your Credit

One of the most important assets a person can have is their credit. Those who do not overextend themselves and pay their bills on time each month will probably have a pretty good credit score. Banks use this numeric score to determine whether or not to loan money. They also set the interest rates of the loans based upon this score. Those who are viewed as a low risk can access funding to buy a home or to start a new business. They will also secure lower interest rates.

Financial literacy is sorely lacking in American youths today. Schools might not be doing enough, but parents can bridge the gap and help their kids learn important financial lessons at an early age. These lessons can help today’s teens avoid many of the common pitfalls that decrease one’s standard of living.

Informational Credit to A C Waring & Associates.

 

 

 

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.

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