As you continue to learn more about how your financial decisions affect your credit, you may often find yourself asking, “Why didn’t anyone tell me this before, when I was younger?” From car buying to credit cards, there are a lot of ins and outs to learn when it comes to managing your finances, and you may have had to learn some of those lessons the hard way.
Teaching your children some of these important financial lessons before they’re faced with tough decisions can help save them a lot of grief and financial woes. Here are some important financial principles that even children should learn and implement to set the stage for a successful financial future.
1. Save, save, save!
Children as young as toddlers can learn the value of saving their money. Giving them the opportunity to work and earn their own money for something they desire rather than buying it for them on the spot teaches them a valuable lesson about impulse control and patience. What may start as saving for a simple toy may translate to them saving for a car as an adult rather than relying completely on loans and credit.
2. Budget
In addition to teaching your children to save for a specific purchase, teaching them to stay on top of every dollar they earn or spend is also very important. For some tips on where to start if you’re new to budgeting yourself, here’s a good article with some basics. Teach them to be aware of their spending habits and preferences so they can budget accordingly. If they learn these lessons when they’re young by running out of money before they can go out on the weekend, they’re being saved from a much harder lesson, like running out of money before they can pay their mortgage.
3. A dollar saved is two dollars earned
This is a crucial lesson to learn when it comes to long-term saving. Teaching your children about taxes, inflation, and the value of time will teach them how to strategically spend their money rather than waste it. Helping them analyze the true value of purchases and how to be a good judge of quality will help them get the most out of their finances and, ultimately, build a good savings.
4. Protect your personal information
It’s also important that children and young adults are taught to protect their personal and financial information. Teach them what their social security number is and why they should protect it. Help them come up with safe ways to manage their information and teach them what to do if they ever discover their information has been compromised. Here are some of the most important things to do immediately if your financial identity has been compromised.
Learning personal financial management at a young age can help your children maintain good credit and set them up for success as they enter adulthood. Work together with them to adopt smart money habits and reap the rewards for years to come as you both benefit from financial freedom.
photo credit: CulverCity5 via photopin (license)
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