Your Kids and the World of Money
January 13, 2017
Money management and knowledge about how to handle your funds is primarily seen as an “adult” thing to do. We say to ourselves, “let kids be kids,” and while that’s fine with most things, you may want to consider becoming more involved when it comes to money. While we do all we can to protect our kids from the pitfalls of life, we can’t forget to prepare them for what they will face as they grow older. And even though your kid may groan and roll their eyes, and refuse to sit down for a lesson, get them to sit down anyway, because they will thank you later in life when they come across those financial obstacles themselves. They will especially thank you when they see how your lessons helped them avoid those pitfalls. So let’s focus on the three S’s: Scams, Saving, and Superior Credit.
Last week, a friend of mine was telling me about how their co-worker won a free ticket for a cruise to the Bahamas. He was very excited! All he had to do was call the number on the back of the ticket and pay his taxes for that free cruise. He called them up, gave them his debit card number, and then hung up and thought nothing of it, because they told him they would call back once his payment has gone through.
“So he waited,” my friend tells me, “and it was a scam all along! They took his money and charged him like ten other things on his account. Can you believe it?” Yeah, absolutely I can. What I can’t believe is that this person didn’t already know better by the age of 23. Now, there’s no wrong age to begin to learn about finances, but imagine how susceptible a 16-year-old could be. Imagine the type of scams that are designed to exploit your kids by speaking to them in language they understand. “Pay us this but get this” scams are quite typical, and it’s better that your kids get a head-start in avoiding these traps very early on. If you help them identify scams or become more involved whenever they say “Mom/Dad, I won something!,” you could prevent your kid from losing money, or worse, their identity. So let them know now that the world is their oyster, but sometimes that oyster is rotten, and the pearl is cracked.
Your kid just got their first paycheck and they’re caught up in the glory of earning their own money. They go to the mall, they go on Amazon, they go hang out with their friends, and now, they’ve lost their entire paycheck in a matter of three to four days. Now they’ll have to deal with waiting until their next paycheck before they can do anything with money. And what if they have an emergency? What if they’re low on gas and may not have enough to get to work? This is the perfect opportunity to teach your kids to save their money, and it’s simple. Help them realize that sooner or later, they will have to budget on their own, which means that they simply cannot spend everything as soon as they get it. This is even easier if your kid still lives at home, because what they would normally pay rent, utilities, electricity, and food, they can now put towards their savings account. Of course you don’t want to get rid of fun and entertainment expenses, but you’re just teaching your kid to have fun responsibly because you know it won’t be all fun all of the time!
Saving builds your account but not necessarily your credit. Something you may want to teach your kids early on is to learn how to manage what their credit accounts may be. Typically, you’ll see the younger generation be more fearful of applying for a credit card because they are worried about debt. Millennials are socially liberal, but fiscally conservative. And their fear of debt is justified, of course, but the opportunity for them to build credit is not something that should be avoided. Eventually, they will have to apply for an auto loan, or another type of loan, and how can they hope to receive better interest rates and terms when they have nothing to base their credit off of? Get involved early on, and teach your kids about the way to manage a credit card, or how to deal with a debt that have to take on. They can build their credit with on-time payments and a great history of debt management. Good credit means companies will cater to you and your needs/wants as opposed to having to plead your case with creditors. You can have the advantage in the playing field if you know how to spend like a wise man or woman!
Overall, we just don’t want our members to lose money over cruise tickets that they paid “taxes” for from a sweepstakes they never entered to begin with!