Tips to Keep Our Kids Out of Debt
Let’s face it, a lot of us have learned about debt and managing our money the hard way. We found out about negative balances when our cards declined at checkout or we saw firsthand what 20% interest on a credit card balance actually adds up to.
While our kids have grown up with money in the digital age, there are still some lessons we can help them to learn while they are under the safety of our homes to allow them to start steps ahead of their peers.
Pre-Teen & Teenager Money Tips
Teach them the basic principles of personal finance such as income, take-home pay, expenses and savings.
Our teens will be more interested in budgeting when they know what they’ll get out of it (be sure to highlight how budgeting can get them what they want).
Help your teen create the budget categories that fit for their life (Clothing, Personal care, Car insurance, Cell phone coverage, Gas money, Entertainment or going out with friends, Food, School supplies or extracurricular activities that you don't pay for).
Assign percentages to each budget category to help them budget more easily (50/30/20 rule can help with this and make budgeting go more quickly - needs, wants and goals).
Highlight and help them curb their impulse spending on items that weren’t considered important when creating their budget.
Teach them about loans (especially student loans and car loans) and help them decide if it’s a smart choice for them or how to avoid crippling debt.
Money Tips For Any Age
Sit down with them on a regular basis to show that money isn’t a taboo topic and your home is a safe place to make mistakes and ask questions.
Show that money should be used for 1) expenses 2) giving (donating or supporting a friend’s fundraiser), 3) saved for later and 4) enjoyed!
Especially for our younger kids, use a clear jar to save to create the visual of money.
Talk about the importance of saving up for larger items and help them break down the math into monthly savings goals (saving for a game, large toy, car, first year of college, etc)
Show them that stuff costs money by removing money from their bank account or piggy bank to make a purchase, this visual will make it more real in the digital world we live in.
Apps & Games for Money Conversations
Learning about money and keeping track of it can be fun and it’s important to show your kids this side of personal finance. They won’t be interested in something boring so here are some tools to keep your kids engaged in money topics, help you track chores, give your child their allowance and ensure they are following the plan you created together.
